By Sfundo Parakozov

JOHANNESBURG, May 23 (Reuters) - South Africa's

commodity-backed currency was stronger against a weaker dollar

on Friday, helped by higher gold prices as worries over the

United States' worsening fiscal health sent investors into the

safe-haven asset.

At 1513 GMT, the rand traded at 17.88 against the dollar

, about 0.7% stronger than Thursday's closing level.

The dollar index was last trading down about 0.6%

against a basket of currencies.

South Africa is a major producer of precious metals and the

rand benefits from higher gold prices, which rose by more than

1% on Friday.

Domestic investor focus will mainly be on an interest rate

decision by the South African Reserve Bank (SARB) next week. It

cautiously held the rate in March citing inflationary risks from

U.S. President Donald Trump's global trade war and the country's

disputed national budget.

Since then, Trump has announced a 90-day pause on

country-specific tariffs, South Africa's inflation has fallen

below the bank's target range and the finance minister presented

a revised budget abandoning an initial plan to raise value-added

tax, the most contentious element in his two previous attempts.

"We expect rates to remain unchanged at 7.50% at the May

meeting, in line with the U.S.'s latest decision," Investec

economist Lara Hodes said in a research note.

"However with inflation notably below the midpoint of the

target range and the rand stronger than it has been in months,

there is a possibility that the MPC committee could decide to

cut rates by -25bp."

On the stock market the Top-40 index was up 0.3%.

South African miners Gold Fields, Harmony Gold

and AngloGold Ashanti ( AU ) last traded up about 3%.

Sibanye Stillwater was roughly up 1% after reporting an

accident at one of its mines, which left 260 miners trapped

underground.

The company said so far 79 workers have been brought to the

surface, with the National Union of Mineworkers (NUM) also

confirming that there were no deaths or injuries reported.

The benchmark 2030 government bond remained

firm, with the yield down 1 basis points to 8.885%.