(Bloomberg) --

The red-hot rally in gold prices driven by investor concern about the coronavirus pandemic and its impact on the global economy has propelled South African gold stocks to record-slaying highs.

A Johannesburg index of producers has surged more than 90% this year, even as the broader South African equities benchmark remains in the red for 2020. The sector rose another 3.2% to an all-time high on Friday.

“Gold mining stocks are essentially leveraged plays on the gold price,” said Seleho Tsatsi, an analyst at Anchor Capital in Johannesburg. “Relatively small moves in the gold price result in big swings in profitability for the gold miners, because these businesses have big fixed-cost bases.”

Gold has advanced 19% this year, driving it within reach of the all-time high price of $1,921 an ounce reached in September 2011. Vast amounts of global stimulus to shield economies from the ravages of Covid-19 haved pushed real yields below zero and made bullion more attractive. The rand price of gold has risen 44%, as the currency weakened against the dollar, improving the profit margins for local producers.

Johannesburg’s five best-performing stocks are all from the sector, with DRDGold Ltd. closing in on a fourfold gain for 2020. Pan African Resources Plc has climbed 99%, Harmony Gold Mining Co. 94%, Gold Fields Ltd. 90% and AngloGold Ashanti Ltd. 72%.

Their breakneck ascent has activated at least one warning that the gains may be overdone. The 14-day relative strength index for the gold stocks gauge is at 73, above the level of 70 that suggests to some technical analysts that the securities are overbought. Even so, there could be further upside.

“Really aggressive central bank action, not just from the U.S. but central banks around the world following the pandemic this year, is probably the biggest driver of gold prices at the moment,” Tsatsi said. “As long as that continues, which it appears as if it will in the short-term, it should be supportive to gold prices.”

©2020 Bloomberg L.P.