Johannesburg’s FTSE/JSE Africa Mining Index gained as much as 1.7% Thursday to the highest since July 2008
, after disruptions to supplies in top exporters Brazil, where a deadly tailings dam disaster harmed production, and Australia, where miners have contended with the effects of storm damage, ignited forecasts for a global deficit.This should translate to stronger balance sheets, good cash flow and the prospect of improved dividends, Van Niekerk said. “The iron ore price rally has also been an unexpected windfall for producers unaffected by the dam issues in Brazil.
Meanwhile, gold has climbed as the case for a US interest rate cut strengthens and an array of geopolitical risks threaten the world’s economies. “Gold has moved quite a bit with some of the recent global events, and rising expectation of rate cuts rather than further tightening by the US Fed,” Van Niekerk said.
To be sure, the rally may be close to running its course, at least one technical indicator suggests. The sector’s 14-day relative strength index has climbed to 76, above the level of 70 that suggests recent gains may be overdone.
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