Platinum and gold price surge boosts ZAR but sustainability of move a concern

Key points

• Metal prices have surged this year, with gold exceeding $4,000/oz and platinum up 60% (outperforming gold year-to-date) amid geopolitical shifts and USD concerns. While most people have focused quite squarely on the spectacular rise in the gold price, not much has been said about the even more impressive 2025 rally in the platinum price. As the world’s largest producer of platinum, this has implications for the ZAR.
• While SA might be the world’s top platinum producer, it has failed to capitalise on the rising prices of gold and platinum, as gold exports declined and platinum exports barely increased as a share of total exports, missing boosts to employment, taxes, and GDP. Without a real economic or mining response to the rise in prices, the ZAR’s performance lacks some of the fundamental foundation to be sustained long-term and raises some concerns about its sustainability.

• Key barriers include unsupportive policies, regulatory uncertainty, licensing delays, unreliable electricity, crumbling infrastructure, corruption, and low gross fixed capital formation, which has been at 14% of GDP since 2018. These factors must be addressed if SA is to take full advantage of the current metal price boom.

 

Baseline view

Currently, the ZAR is performing extremely well, which is related to the surge in SA’s terms of trade, a function of the surge in metals prices. That may well continue so long as investors give SA the benefit of the doubt and believe there is a chance for meaningful reforms. However, this also leaves the ZAR vulnerable. If the reforms fail to materialise, SA lacks the fundamental justification to sustain the strength in the ZAR, meaning that importers would do well to take advantage of current levels and lock in attractive forward rates.

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