The rally in gold, the only good news, was again driven by expectations of Fed rate cuts and geopolitical uncertainties.
Although it was a busier week on the economic front, none of the news was good. Meanwhile, economists are holding their breath for the GDP figures for the third quarter to see if the economy is improving or still tanking. At least gold brought a sparkle, reaching a record high.
Bianca Botes, director at Citadel Global, says spot gold spiked to $3,484/ounce on Monday, marking its highest level since April. “The rally continued through mid-week, with prices reaching around $3,593.20, driven by expectations of Fed rate cuts, geopolitical uncertainties and strong Exchange Traded Fund inflows.
“Notwithstanding a slight pullback from its peak, stagflation concerns persist. This performance underscored gold’s role as a safe haven asset, with potential volatility looming ahead of today’s US jobs data.”
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Oil lower all through the week
On the other side of the commodities pond, Brent crude oil prices trended lower throughout the week, reflecting anticipation around an upcoming expanded OPEC+ meeting and broader demand concerns.
“It opened on Monday around $68.00/barrel before declining steadily. By 5 September, prices fell to approximately $66.80/barrel, marking a roughly 2% drop from the week’s start. The downward pressure highlighted ongoing market sensitivities to global economic signals.”
Busisiwe Nkonki and Isaac Matshego, economists at the Nedbank Group Economic Unit noted that the Brent crude oil price retreated for a second day, ending Thursday at about $66.64 per barrel, after OPEC+ hinted at further output increases even though oil demand remains sluggish and the US and other countries sit with relatively healthy inventories.
They also noted that gold surged to fresh highs early in the week, peaking above $3 500, driven by increased central bank demand amid expectations of US rate cuts.
The rand soldiers on
Botes says the rand exchange rate started the week on a strong footing, supported by the strong gold price performance. After trading as low as R17.55/$, the rand weakened to R17.72/$, down 0.42% from the previous week.
Nkonki and Matshego also noted that the rand held relatively steady this week, easing only slightly against most major currencies. This afternoon the rand was trading R17.58.
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Absa Manufacturing PMI disappoints
The Manufacturing PMI fell by 1.4 points to 49.5 in August, slipping back into contractionary territory and partially reversing July’s brief expansion. Sector activity remained subdued, with both domestic and export demand under pressure, reflected in an 8.5-point drop in new sales orders to 47.4.
Mamello Matikinca-Ngwenya, Siphamandla Mkhwanazi, Thanda Sithole and Koketso Mano, economists at FNB, business activity continued its 10-month contraction streak, while supplier deliveries declined, likely due to weaker orders rather than logistical improvements.
“Input cost pressures eased slightly, supported by a stronger rand and stable oil prices. Encouragingly, the index tracking expected business conditions in six months edged up to 56.8, suggesting some resilience amid a challenging trading environment.”
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Vehicle sales see a recovery in new passenger car sales
Vehicle sales volumes increased by 18.7% in August, reaching 51 880 units, up from 51 383 units in July. The FNB economists say the increase was mainly driven by continued growth in new passenger car sales, which expanded by 22.5% to 36 941 units, marking a 14th consecutive monthly gain. Year-to-date (January to August), total sales are 48 790 units higher than during the same period last year.
Nkonki and Matshego believe that rising household incomes, low inflation and the 125-basis-point reduction in interest rates should sustain the recovery in new passenger vehicle sales. “However, the upside for commercial vehicle sales will be contained by weak business confidence, higher US tariffs on South Africa, the end of AGOA and generally subdued fixed investment.”
Katrien Smuts, economist at the Bureau for Economic Research (BER) say although activity in the sector remained subdued, it is worth noting that the average PMI for the third quarter so far (with September data still outstanding) is tracking 4.8 points above the average for the second quarter, pointing to some underlying improvement.
“A further positive came from a decrease in the purchasing price index, suggesting some relief on the input cost front.”
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RMB/BER Business Confidence Index falls to below long-term average
The RMB/BER Business Confidence Index (BCI) edged down to 39 index points in the third quarter of 2025, from 40 previously, falling below its long-term average of 42 and reflecting widespread dissatisfaction among businesses.
Matikinca-Ngwenya, Mkhwanazi, Sithole and Mano point out that while the composite index appeared largely flat, this masked significant sector-level shifts, with confidence in each sector moving by ten points or more, well beyond typical volatility.
“Overall, the survey results suggest that the economy continues to muddle through, with confidence levels too low to catalyse the investment needed to lift South Africa’s growth and employment trajectory.”
Smuts says the underlying survey results suggest an economy that continues to muddle through, with several activity and demand indicators hovering around their 20-year average levels. “However, the current level of confidence remains over all too low to support the kind of investment activity needed to lift South Africa’s potential growth and job creation prospects over the medium term.”
