Gold Tariffs, Fed Rate Cut Speculation, and the Rand’s Steady Range

In this week’s market review, TreasuryONE Currency Strategist André Cilliers and ETM Analytics examine the latest developments driving currency and commodity markets.

The announcement of potential US tariffs on gold — unexpected given gold’s record highs — has injected fresh volatility into global markets. While the White House has yet to confirm its final position, the uncertainty has pushed prices upward, benefiting commodity producers in the short term.

Closer to home, South Africa faces its own diplomatic challenges with the US, with measures expected to smooth trade relations despite the absence of an ambassador in Washington.

Attention now turns to the US inflation figures due this week, with core inflation expected to remain well above the Federal Reserve’s 2% target. Combined with recent weak US labour data — including downward revisions to job creation and a slight uptick in unemployment — the probability of a September interest rate cut by the Fed has climbed to 89%. Market speculation has also increased over the possibility of a larger-than-expected cut.

For the rand, a softer US dollar and stable domestic conditions have kept the currency trading firmly within the established range of R17.60 to R18.20 against the US dollar, with little expectation of movement outside this band in the short term.