Gold Hits Record High As Trump's Tariff Threats Send Investors Racing To Safety—And One Currency Is Reaping The Rewards

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The South African rand staged an unexpected rally Monday as gold prices surged to record highs, offering a glimpse of how emerging market currencies tied to commodities might weather the storm of renewed U.S.-China trade tensions.

The commodity-backed rand climbed roughly 1% against the dollar after falling 1.7% intraday following President Donald Trump’s announcement Friday afternoon of fresh tariff threats against China, according to Reuters. At 10:22 a.m. ET Monday, the South African rand traded at 17.3425 against the greenback, clawing back losses as investors piled into gold as a safe-haven asset.

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For investors watching how global currencies respond to Trump’s trade policy whiplash, the rand’s performance offers an important case study. Unlike pure risk-sensitive currencies that simply crumble when geopolitical tensions flare, commodity-backed currencies can sometimes benefit from the very uncertainty that punishes their peers—provided their underlying commodities catch a bid.

The Gold Effect

The rand’s bounce came as gold prices hit record highs, with investors seeking shelter from potential trade war fallout. South Africa remains one of the world’s major gold producers, creating a natural hedge for the currency when precious metals rally.

“Risk appetite appears to be back at this week’s start, so one should expect the ZAR to make a modest recovery,” ETM Analytics said in a note.

The dynamic highlights a crucial point for currency traders: while the rand typically takes cues from global risk sentiment and U.S. policy—like other emerging market currencies—its commodity exposure can sometimes override pure risk-off moves.

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The Opportunity Cost Problem

But the rally may prove fleeting. South African investors are bracing for mining production data and retail sales figures this week that could reveal the domestic economy’s struggles to capitalize on the current commodity price boom.

“A harsh reminder of the opportunity cost SA has suffered will likely come in the form of the latest mining production data later this week, highlighting SA’s inability to take advantage of the commodity price boom,” ETM Analytics warned..

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This represents the double-edged sword for commodity currencies in 2025. While favorable commodity prices can provide support, structural economic challenges can limit how much benefit actually flows through to the broader economy and currency valuation.

The Johannesburg Stock Exchange’s Top-40 index rose 0.8% Monday, while South Africa’s benchmark 2035 government bond strengthened slightly as the yield fell one basis point to 9.115%.

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This article Gold Hits Record High As Trump's Tariff Threats Send Investors Racing To Safety—And One Currency Is Reaping The Rewards originally appeared on Benzinga.com

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