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Johannesburg - The rand was weaker at midday due to an improved inflation outlook from the US Federal Reserve (Fed) that caused gold to lose its shine as a safe haven.
“Gold is used as a hedge when people believe inflation will increase but with the US flashing its inflation forecast‚ people are expecting global inflation to subside causing a sell-off in gold‚” said Henry Flint of Thebe Stockbroking.
The Fed said it expected inflation to decline to between 0.8% and 1.2% this year from its previous forecast of 1.3% to 1.7% at its Federal Reserve Open Committee (FOMC) meeting in March.
“The Fed thought the economic support that they were providing to the economy would fuel inflation but that has not materialised causing the downward revision‚” said Flint.
At 11:23‚ the rand was bid at R10.2871/$ from an overnight close of R10.1864 and Tuesday’s close of R9.9999. The local currency was bid at R13.5858/€ from its previous close of R13.5357 and was at R15.9042 against sterling from R15.7690 at its previous close.
The euro was bid at $1.3206 from $1.3287 at Wednesday’s close and $1.3385 at Tuesday’s close.
At the same time the spot gold price had lost 3.01% at $1‚302.98 an ounce.
