• Gold prices have stabilised to above US$2.3k after recent volatility,
  • Investors are closely watching Fed policy, US inflation data set for this week
  • South Africa ranks 9th, with production down 85% since 1980 owing to blackouts, policy shifts
  • Zimbabwe ranks 8th in Africa

Harare- Global gold prices have started the week on a firmer note, stabilizing around $2,305 per ounce yesterday, following a 3.5% drop on Friday - the largest daily decline since November 2020. Investor sentiment shifted last week after a strong jobs report, with many scaling back expectations for Federal Reserve easing this year.

In a bearish development, China's central bank halted gold purchases in May after 18 consecutive months of buying. Traders are closely watching the upcoming FOMC monetary policy (Federal Open Market Committee, which is the monetary policymaking body of the Federal Reserve, the U.S. central banking system) decision and key US CPI data to determine when the Fed might make its first rate cut.

Gold has long been a favourite among investors and traders, making it one of the most traded precious metals globally. It is widely popular due to its status as a safe-haven asset, which helps to offset risk and hedge against inflation.

Gold's trading volume is driven by a variety of factors, including economic uncertainty, inflation concerns, and changes in monetary policy decisions.

With the advent of the Ukraine-Russia War in February 2022 and later the Israeli-Hamas War amid El Nino induced droughts, gold has emerged as a top hedging asset globally.

Gains for the precious metal come against a backdrop of increasing geopolitical tension from conflicts in Ukraine and the Middle East, along with uncertainty in the run-up to what is expected to be a divisive election in the United States this November.

While the high price has garnered attention, Western investors have largely remained on the sidelines. This has left gold to find support from large bulk purchases by central banks including Turkey, China and India, along with strong retail sales from Asian and emerging markets.

China, Australia, Russia, Canada, and the United States make up the top five gold producing countries, with South Africa coming in at number 9.

In 2023, South Africa produced 100 metric tons of gold, up from 89 MT in 2022. An estimated one-tenth of global gold reserves are located in the country, and its Witwatersrand Basin is one of the largest gold resources in the world.

South Africa has been a top gold producer for decades, but between 1980 and 2018 the nation's gold output fell by 85 percent.

In Africa, known as the "Gold Coast", Ghana is the continent's largest gold producer. The country has a rich history of gold mining, dating back to the 15th century, and today, gold mining is a major part of its economy, contributing over 40% of its total export earnings.

Mali, Burkina Faso, South Africa and Sudan make up the top five African gold producers, while Zimbabwe comes 8th.

Zimbabwe's gold mining dates back to the pre-colonial era, and the country possesses vast gold reserves. Mining is vital for Zimbabwe's economy, contributing over 60% of its export receipt earnings, and up to 31% of exports at the upper end.

Major Zimbabwean gold producers include Fredda Rebecca, Caledonia Corporation and Padenga Holdings, producing more than 6,000 kg per annum, which equates to over 6 tonnes.

Last year, Zimbabwe produced 30 tonnes of gold, shy of the 40 tonnes projected and 35 tonnes in 2022.

This year, the government targets 40 tonnes, despite the operating conditions being worse off than in 2023.

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