Firm rand tracks record gold

Johannesburg - A firm rand tracked a stronger euro in midday trading on Monday, amid record gold prices.

At 11:35 the rand was bid at 7.4034 to the dollar from 7.4237 at its previous close. It was bid at 11.0710 to the euro from its previous close of 11.0870 and was at 12.3545 against sterling from 12.4158.

The euro was bid at $1.4974 from $1.4920 overnight.

A local trader said: "We are tracking a firmer euro, while the gold price is at a new high."

"The range is 7.35-7.45 (against the dollar)," he said.

Earlier, Dow Jones Newswires reported that the euro gained more ground against the dollar in Asia on Monday as signs of strong demand for commodities including gold added to hopes that the world's economy is recovering, prompting traders to buy high-risk currencies.

The euro climbed to an intraday high of $1.4973 on EBS, about half a US cent higher compared with late Friday in New York. Its appreciation comes as spot gold rose to a fresh record of $1 127 a troy ounce during Asian hours, prompting speculators to unwind bets against currencies that are considered riskier than the US unit but pay the buyers more interest, such as the Australian dollar and sterling as well as the euro.

"Gains in gold prices lifted demand for currencies of commodities-exporting nations like the Aussie against the US dollar," said Osao Iizuka, chief foreign-exchange trader at the Sumitomo Trust & Banking. "Then the selling of the US dollar spread across other currencies, causing the euro to gain ground against it."

Until the US Thanksgiving holiday on November 26, around which time the volume of global currency trades often starts shrinking as US players go on vacation, the euro could rise to $1.5300 amid a continuing broad downtrend in the greenback, Iizuka said. A fall below $1.4700 is unlikely over that period, he added.

- I-Net Bridge