Gold Price Support Fuels Bullish Outlook for South African Rand

TD Securities remains bullish on the South African Rand (ZAR), despite domestic headwinds. The firm notes that these challenges have failed to generate sustained weakness in the currency, and the downtrend of USD/ZAR remains intact.

The analysts attribute this resilience to gold prices staying above $4,000/oz and global risk sentiment remaining resilient. As a result, they view ZAR as offering attractive carry and see USD/ZAR rallies as opportunities to sell.

In the second quarter of 2023, new domestic political corruption allegations did not weaken the ZAR. Similarly, the unexpected South African Reserve Bank (SARB) rate hold decision in July briefly drove USD/ZAR above the 200-day moving average but was unable to sustain it.