Gold stocks on fire

[] — GOLD stocks, from junior miners to industry bellwethers, rallied on Tuesday, fuelled by inflation fears over the US stimulus package, the record high price of the yellow metal and an attractive rand gold price.

“Gold stocks are on fire today,” an equity derivatives dealer said as the gold index edged up 3.55%.

At the close on Tuesday, DRDGOLD climbed 8.24% followed by Simmer & Jack with a 9.41% increase.

AngloGold Ashanti was 3.58% higher, while Gold Fields rose 4.08%.

Peter Armitage, fund manager at Investec Securities, said gold counters regained flavour as the rand gold price looked attractive at a near record level of around R9,500/oz, compared to R8,000/oz at the start of the year.

Armitage said the rand gold price was close to the all-time high levels of around R10,000, a peak reached in early 2009.

The solid gains also came after the gold price scaled fresh highs, breaching the $1,400/oz level on Monday.

Spot gold reached fresh highs again on Tuesday morning with a best of $1,424.33/oz. The yellow metal was most recently at $1,422.35/oz, having hit an intraday best level of $1,405.76/oz on Monday.

“Gold is still reacting to quantitative easing in the US, with the dollar very weak. I think we will see an extended run today and further into the week to $1,430/oz with some easing possibly towards the end of the week, back down to just below $1,395/oz,” a local gold dealer said.

“Gold has suddenly come back into favour,” the equity derivatives dealer said, noting that investors were concerned the latest stimulus packages in the US could fuel inflation.