The gold mining index in South Africa rose the most in three months on speculation the U.S. Federal Reserve may increase stimulus after unemployment benefit claims in the country unexpectedly grew last week.
The FTSE/JSE Africa Gold Mining Index jumped 3.5 percent, the most since Jan. 26, to 2,287.26 by the close in Johannesburg. AngloGold Ashanti Ltd., Africa’s biggest producer of the metal, surged 3.7 percent. Gold Fields Ltd., the world’s fourth-biggest gold producer, added 3.4 percent. Gold gained as the dollar weakened against the euro.
“Gold stocks are poised to do well” provided the gold price stays at these levels, Deryck Janse van Rensburg, a Johannesburg-based portfolio manager at BOE Stockbrokers, said by phone.
Jobless claims fell by 1,000 to 388,000 in the week ended April 21, from a revised 389,000 a week earlier, which was the highest since early January, Labor Department figures showed today. The median forecast of 48 economists surveyed by Bloomberg News called for a drop to 375,000. Fed Chairman Ben S. Bernanke said yesterday the central bank will do more to fuel growth if necessary, resulting in dollar weakness and bullion strength. Bullion and the U.S. currency tend to move inversely.
Gold shares including AngloGold also recovered from an oversold position, Janse van Rensburg said. AngloGold’s 14-day relative strength index declined to 22.7 on April 24. A reading of 30 or below signals to some technical analysts a security is undervalued and poised for a rebound.
“After the recent sell-off, it was anticipated there would be a bit of a bounce,” he said.
The dollar depreciated against the euro for a third day, down 0.1 percent to 1.3234, heading for the weakest in more than three weeks.