Weekly Market Recap: 10–16 February 2025

Gold Prices Approach Historic Highs Amid Trade Tensions

During the week of 10 to 16 February 2025, gold prices surged significantly, nearing the $3,000 per ounce mark (approximately ZAR 55,500 per ounce at an exchange rate of 18.50 ZAR/USD). This bullish momentum was driven primarily by escalating global trade tensions following U.S. President Donald Trump’s announcement of a 25% tariff on steel and aluminium imports. The imposition of these tariffs heightened investor concerns about potential trade wars, leading to increased demand for gold as a safe-haven asset. Spot gold reached a peak of $2,942.70 (around ZAR 54,450) per ounce during the week.

In response to the rising prices, major financial institutions adjusted their forecasts. Goldman Sachs raised its year-end gold price projection to $3,100 per ounce (approximately ZAR 57,350), with the possibility of prices climbing as high as $3,300 (ZAR 61,050) if policy uncertainties persist. UBS analysts also anticipate that market conditions could push gold prices up to $3,200 (ZAR 59,200) this year before stabilising.

Impact on South African Markets

As a leading gold producer, South Africa’s economy is closely tied to the performance of the precious metals market. The surge in gold prices positively influenced the Johannesburg Stock Exchange (JSE), with the benchmark FTSE JSE Africa All Share Index approaching record highs. Investors appeared to overlook concerns about a U.S. aid freeze, focusing instead on the favourable economic outlook bolstered by strong gold prices.

The South African rand experienced fluctuations against the U.S. dollar during this period. On 11 February, the rand traded at ZAR 18.47/USD, slightly weaker by 0.1% from its previous close as markets assessed the impact of the newly imposed U.S. tariffs. By 12 February, the rand remained stable at ZAR 18.51/USD, with investors awaiting U.S. inflation data and Federal Reserve Chair Jerome Powell’s remarks on interest rates. The currency reached its lowest point of the week on 14 February, trading at ZAR 18.30/USD, before slightly rebounding to ZAR 18.37/USD on 16 February.

Broader Economic Implications

The announcement of new tariffs by the U.S. administration not only influenced gold prices but also raised concerns about global economic stability. The potential for retaliatory measures from trade partners and the uncertainty surrounding international trade policies have led investors to seek refuge in assets like gold. Additionally, central banks, particularly in emerging markets, have increased their gold purchases as part of their reserve diversification strategies, further supporting the upward trend in gold prices.

Summary: the week of 10 to 16 February 2025 was marked by significant movements in the gold market, driven by geopolitical tensions and economic policy decisions. These developments had a pronounced impact on South African financial markets, underscoring the interconnectedness of global economic events and commodity prices.