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Johannesburg - South Africa's main stock indices fell to their lowest level in nearly four months on Thursday, weighed down by mining shares such as Harmony Gold [JSE:HAR]as metal prices faltered.
The market also booked its fourth straight session of declines as the strengthening dollar, which hit a four-year high earlier in the day, pushed spot gold to close to a nine-month high just above $1 200 an ounce.
If the precious metal's spot price falls below $1 200 an ounce the industry could reach a tipping point that would force producers to cut output or shut mines, analysts say.
AngloGold Ashanti [JSE:ANG], Africa's top producer of the precious metal, and Harmony fell between 2% and 3%.
Growing worries about the health of the Chinese economy have also weighed on sentiment and the wider resource sector.
"We've had negative news out of China and it doesn't look the government will step in with a stimulus and that has hit commodity prices," said Matthew Brittain, a portfolio manager at Sanlam Private Wealth.
The JSE Top-40 index lost 1.18% to 44 345, a level last seen at the beginning of June. The broader All-share index was off 1.1% to 49 503.
Technical charts suggest both indices are due for a rebound, with their 14-day RSI, a widely watched momentum indicator, showing they have strayed into oversold territory.
"We don't think it is the end of the bull market and the sell off over the last few days presents a good buying opportunity for fund managers sitting on cash," Brittain said.
Hit by falling iron ore prices, Assore tumbled 5.8% to R217, extending losses so far this year to more than 36%.
Trade was brisk, with 200 million shares changing hands - above last year's daily average of 176 million. Some 186 companies dropped while 129 gained.
