JSE down as gold, platinum sectors bleed

Johannesburg July 20)  Gold and platinum counters took a beating on Monday morning as the price of the precious metals dropped sharply to their lowest levels in more than five years.

The prices of South Africa’s top gold and platinum shares were amongst the biggest losers on the JSE on Monday and many of them traded at new 52-week lows.


But the JSE All-Share index was still higher by midday thanks to solid performance by the big double listed shares which all followed the European markets higher as the situation in Greece normalised, with the banks in the country open again.


By midday the All-share index was 0.59% higher at 53 033 and the Top 40-index, which represents the 40 biggest shares on the JSE, gained 0.77% to 47 417 points. These gains were mainly due to the industrial index gaining 0.86% and the financial index trading 0.54% higher.


Additionally, the resources index was only 0.06% lower after the double listed commodity conglomerates all traded higher.


The gold sector however lost another 4.78% to trade below the 900 level on 892 points after the gold price dropped as much as 4% to its lowest in more than five years on Monday.

Bullion fell to as low as $1 088.05 an ounce - its weakest since March 2010 - shortly after the Shanghai Gold Exchange opened trading, with volumes soaring to a record level.

More than 3 million lots were traded on a key contract on the Shanghai Gold Exchange, compared to less than 27 000 lots on Friday, Reuters data showed. Prior to Monday, the volume for July had averaged less than 30 000 lots. By midday the gold price recovered to $1 185.


Gold has breached key support levels since last week as the dollar gained after Federal Reserve Chair Janet Yellen told Congress that the Fed is on course to raise interest rates if the US economy expands as expected.


Analysts said the gold market looks very weak with China, the biggest buyer of gold, now selling gold. The expectation is that traders want to push the gold price to below $1 000 per ounce.

Dragged down by gold's tumble, platinum lost as much as 5% to $942.49 an ounce, its weakest since February 2009, before rebounding to trade at $982, down 1.32%.


These sharp drops had a devastating effect on share prices with Harmony [JSE:HAR] dropping 7.38% to yet another 52 week low of R12.75. That means that the share price, which reached a 52 week high of R35.50 earlier this year, is now more than 60% lower for the past twelve months.


It is almost inconceivable to think that Harmony, only four years ago, traded as high as R113.00.


Anglogold Ashanti [JSE:ANG] dropped 4.98% to R89.90 on Monday and is now more than 50% lower over the past twelve months.

In the platinum sector the country’s two biggest platinum producers, Anglo American Platinum [JSE:AMS]  and Impala Platinum [JSE:IMP]  both traded at new 52 week highs after losing more than 4% of their value in the morning’s trade. Amplats dropped 4.28% to reach a low of R257.45 and Implats traded 4.50% lower on R48.23.

Amplats traded as high as R493.88 less than a year ago when the biggest strike in the industry was still in full swing.


The resources index however held its own due to gains in the prices of big double listed shares such as BHP Billiton [JSE:BIL], Anglo American [JSE:AGL] and Glencore [JSE:GLN]. The star performer was Glencore which gained 1.12% to R47.20 while Billiton traded 0.55% higher R239.82. Anglo was 0.68% stronger despite the big losses suffered by Amplats.


Amongst the big industrial shares Naspers gained 1.21% to R1 919.85 and British American Tobacco [JSE:BTI] traded 0.89% stronger on R709.61. Mondi PLC [JSE:MNP] was 0.68% stronger on R293.30.


MTN [JSE:MTN] was the busiest share on the JSE on Monday in terms of value but the share price lost 0.17% to R216.87.

Source: Fin24