Johannesburg - It was an extreme day on the markets as gold touched $405 (R2 499) an ounce yesterday and the rand marched through key levels to reach R6.14 a dollar.
It was a seven-month high for the local currency and the maintenance of prices for gold that, except for this year, have not been experienced since 1996.
Patrick Mathidi, the managing director of Andisa Securities, said yesterday's rand movement would have sent shivers down the spines of executives in heavy industrial companies and resource firms.
Reasons for the rand's vigour included the weakening of the dollar, the increase in the gold price, the firmer rand dollar exchange and flows from exporters, he said.
Some exporters, including industrial and resource stocks, would be panicking and recalling their proceeds from offshore as they were heavily exposed to the firmer rand.
He mentioned that the Reserve Bank dabbled, and levels of R6.20 to the dollar were thought to be attractive for the bank.
Then there were a number of large foreign banks that would have automatic stop-losses in place so that when the rand dropped below certain levels, the banks would gear up into buying mode.
Rudolph Vermeulen at Global Trader added that the "entire world is awaiting the US interest rate decision on Wednesday. A 25 basis points move has already been priced in but is this the start of a new cycle, will there be more in August?"
The resulting volatility had speculators looking for commodity-based currencies.
The surprise handover of Iraq by the US yesterday morning had been positive, with equities in particular breathing a sigh of relief. For now.
Vermeulen reckoned the rand was being pushed purely by dollar weakness. He said there was nothing holding the rand back and it could test R6.09 next.
Gold's rise was a "funny one" according to Mathidi, who attributed the upward trend to the weaker dollar, the happenings in Iraq and geopolitical tensions, a buzzword meaning war-torn areas with lots of oil cause uncertainty in the market.
Mathidi did not think gold would continue above $400 for long.
Vermeulen felt there was lots of support for its remaining above the $400 an ounce mark. But he did not think it would shoot all the way to $430 like it did in March.