Rand strengthens as gold gains and dollar weakens

South Africa’s commodity-linked currency strengthened against a weakening US dollar on Friday, supported by a rise in gold prices as concerns over the United States’ deteriorating fiscal outlook drove investors towards safe-haven assets. By 15h13 GMT, the rand was trading at 17.88 to the dollar, approximately 0.70% firmer than Thursday’s closing level. Investor attention is now turning to the upcoming interest rate decision by the South African Reserve Bank (SARB), due on Thursday this week. The central bank opted to keep rates unchanged in March 2025, citing inflationary risks stemming from President Donald Trump’s global trade tensions and uncertainty surrounding the national budget. On the equities front, the Top 40 index posted a modest gain of 0.30%.

In the United States, equities ended the week on a weaker note, weighed down by mounting trade tensions. The S&P 500 declined by 1.10%, the Nasdaq shed 1.50% and the Dow Jones Industrial Average fell over 400 points. Market sentiment soured after President Trump proposed a 50% tariff on imports from the European Union starting 1 June, citing a breakdown in trade negotiations. Additionally, he threatened a minimum 25% tariff on Apple products if the tech giant fails to relocate iPhone production to the US, causing Apple shares to drop by 2.40%.

The UK’s FTSE 100 dropped by 0.20% on Friday, reversing earlier gains as renewed US-EU trade hostilities weighed on broader European markets. President Trump’s proposed tariffs on EU goods and Apple’s foreign-manufactured devices dampened risk appetite. Earlier in the session, the index had been buoyed by stronger-than-expected UK economic data: retail sales excluding fuel rose by 1.30% month-on-month and 5.30% year-on-year in April, while consumer confidence also improved in May.

European equity markets mirrored the negative sentiment, ending sharply lower after Trump’s comments signalled a significant escalation in transatlantic trade tensions. The Eurozone’s STOXX 50 index dropped 1.90% to 5 322, while the broader STOXX 600 fell to 545, as investors feared diminished demand from one of Europe’s key export markets.

In Asia, Japanese equities rebounded, with the Nikkei 225 rising 0.47% to 37 160 and the broader Topix index gaining 0.68% to 2 736. The recovery was driven by a favourable inflation report and bargain hunting following the previous session’s losses. In contrast, Chinese markets continued to lose ground. The Shanghai Composite declined by 0.94% to close at 3 348, and the Shenzhen Component dropped 0.85% to 10 132, marking a second consecutive session of losses. This came despite signs of progress in US-China trade discussions, as selling pressure persisted.

In commodities, WTI crude oil futures edged higher to $61.60 per barrel on Friday, though the contract remained on course for its first weekly decline in three weeks amid expectations that OPEC+ will continue increasing output. Meanwhile, gold prices rose by more than 1.50%, reaching approximately $3 350 per ounce, as heightened trade tensions stoked demand for safe-haven assets.