South African Rand Rises vs. USD as Gold Breaches Barrier
The South African rand traded around 17.2 per US dollar in the forex market, its highest in two weeks, mainly supported by the rising prices of precious metals, particularly gold, far outpacing the modest rise in the dollar.
ZAR popped higher the day after the report of declining South African foreign reserves, which some analysts linked to a steep tariff slammed on the country by the United States.
Gross foreign exchange reserves in South Africa dropped to $69.74 billion in September 2025, down from a record high of $70.42 billion in the previous month.
The decline came amid a decrease in foreign currency reserves ($47.795 billion vs. $50.160 billion in August). Meanwhile, increases were observed in gold reserves ($15.383 billion vs. $13.757 billion) and SDR holdings ($6.561 billion vs. $6.499 billion).
Additionally, the forward position, representing the central bank’s unsettled or swap transactions, rose sharply to $1.178 billion in September from $0.535 billion in the previous month.
Gold extended its rally above $4,000 per ounce as escalating geopolitical risks in Europe and renewed instability in France increased safe-haven demand.
With Europe’s fragility contrasting with investors’ flight to safety, gold remains favored over the euro in the near term. Support for gold stands at $3,985 and resistance at $4,021
Gold breached a psychological barrier as investors showed significant interest in safe havens amidst the US lockdown. The US dollar struggles to recover due to negative sentiment as markets follow China’s gold buying.
South Africa is ranked among the top beneficiaries of rising prices of gold in the market. With uncertainties lying ahead, traders continued to monitor global risks and uncertainties, including the prolonged US government shutdown, while assessing its potential impact on interest rates.
South Africa’s central bank is expected to keep rates unchanged in November, aiming to anchor inflation at the lower end of its 3%–6% target, its newly preferred goal.
Its forecasts indicated inflation peaking at 4% in Q4 2025 before falling to 3% by 2027, leaving room for potential rate cuts next year. Meanwhile, attention remains on trade relations with the U.S., as the African Growth and Opportunity Act (AGOA) officially expired last week.
Although President Donald Trump reportedly signaled support for a one-year extension, the move was stalled by the US government shutdown. #South African Rand Rises vs. USD as Gold Breaches Barrier#
