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South African rand pauses; gold reaches new heights

South African rand pauses; gold reaches new heights

The South African rand paused on Tuesday. It lost some of the gains it had made, which were fueled by gold prices reaching an all-time high.

At 1507 GMT the rand was trading at 18,15 against the US dollar, a drop of more than 0.3% from its previous closing.

Gold reached a record price of $3,038.26 an ounce as investors sought to protect themselves from the trade tensions caused by President Donald Trump’s tariff policies.

South Africa is one of the world's major producers of precious metals. Analysts say that a record price for gold could encourage miners in South Africa to increase production.

"At some stage, a rising gold price will encourage local miners into making greater efforts to mine gold deposits that are difficult to reach. ETM Analytics said in a recent research note that what may have seemed unviable several years ago, now looks interesting.

The rand is resilient in spite of an uncertain global and domestic backdrop.

For the first time since the end of apartheid, the national budget has been stalled due to disagreements within the ruling coalition.

Since Trump's return in January to the White House, relations with the United States are rapidly deteriorating. The U.S. president has cut aid to South Africa and some analysts believe that the African country could lose its preferential status for trade under the U.S. African Growth and Opportunity Act.

This week, domestic data will be dominated by Wednesday's inflation numbers and Thursday's announcement of monetary policy. The South African Reserve Bank, according to economists polled, could stop its rate-cutting cycles due to the abundance of risks.

Johannesburg's Top-40 Index closed 0.5% higher. The yield on the benchmark 2030 government bond dropped 3.5 basis points to 9.125%. (Reporting and editing by Alexander Winning with additional reporting from Bhargav Asharya, Susan Fenton, Alex Richardson).

(source: Reuters)