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Rate hikes and firm Treasury yields are driving gold to a 7-month low.
Gold prices were stable on Wednesday, but remained near the seven-month low they hit the previous session as the Federal Reserve raised interest rates and Treasury yields rose. As of 1109 GMT spot gold was unchanged at $4,010.11 an ounce, having touched its lowest level in November last year of $3,942.99 during the previous session. U.S. Gold?futures?for August delivery fell 0.4% to $4.023.80/oz. The yellow metal suffered its first quarterly decline since 2024. U.S. Treasury rates rose for the third consecutive session. The stronger U.S. Dollar also increased pressure, as it made bullion more expensive for overseas buyers. UBS analyst Giovanni Staunovo said, "The weakness in the market is partly driven by Hammack's comments suggesting that a rate hike may be necessary and market participants are pricing in more?rate increases for this year." Beth Hammack, the president of the Federal Reserve Bank of Cleveland, said Tuesday that she might advocate for higher interest rates if inflation continues to rise. CME FedWatch shows that traders expect a rate increase by September. Staunovo said that the expectation of more hikes is not helping to boost investment demand. ETF holdings, too, have experienced renewed outflows over the past few days. The Fed may be able to get more clues about its policy direction by examining the June ADP Employment data due at 1215 GMT and Thursday's Nonfarm Payrolls report. The markets will also be watching the annual conference of the European Central Bank in Sintra on Wednesday. Both Fed Chair Kevin Warsh, and ECB president Christine Lagarde are scheduled to speak. Geopolitically, there are concerns about the prospects of U.S. diplomacy with Iran after Tehran refused to meet'senior U.S. envoys' who travelled to the region in the wake of the recent outbreak of hostilities. Spot silver dropped 0.4% to $58,33 an ounce. Platinum rose 0.4% to $1,556.95 after reaching its lowest level since November. Palladium fell 1.4% to $1187.50. (Reporting and editing by Harikrishnan Nair, Diti Pjara and Noel John from Bengaluru)
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MORNING BID AMERICAS - Kicking off H2
What's important in the U.S. and Global Markets Today By Mike Dolan. Editor-at-Large for Finance and Markets Investors are in a cautious mood as we begin the new quarter, month and second half. U.S. Treasury rates have risen overnight, ahead of the June jobs report, and they're already anticipating the second-quarter earnings season. The jump in Treasury yields was not triggered by a specific event, but it came after news of a'surprise' increase in U.S. jobs for May. It also comes before Federal Reserve Chair Kevin Warsh speaks at the European Central Bank annual forum later today in Portugal. Below, I will go into more detail. Check out the first in a new series of mid-week articles where I explore some of the less obvious topics in finance and the markets. Is a younger population still as beneficial to the economy as it used to be? Listen to the most recent episode of Morning 'Bid, a daily podcast that focuses on the key issues investors will focus on at the start of the new quarter. Subscribe to the Morning?Bid daily podcast and hear journalists discussing the latest news in finance and markets seven days a week. KICKING H2 It appears that the U.S. labour market is gaining momentum. Many economists believed that the so-called JOLTS April report showed a surge in available jobs, but argued it was an anomaly and would be revised downward. Openings rose again in May's report to reach a 2-year high. ADP's private sector jobs figures are due today. The June national payrolls report will be released a day earlier on Thursday, owing to the Independence Day holiday. The Iranian side did not show up for the top-level meetings between U.S. officials and Iranian officials that were supposed to begin on Tuesday. This was due to disagreements over the details of the framework deal. On the FX market, Japan's currency, the yen, slashed through 162 to dollar on Tuesday, reaching new lows of 40 years. However, there has been no intervention so far to stop it. South Korea's exports soared by over 70% in the past month. This was their highest pace in almost 50 years. The surge in exports of chips was responsible for this explosive 200% growth. The country is now only the fourth to surpass $100 billion in exports per month. Wall Street is now focusing on the second quarter earnings season. It's not surprising, given the impact the last quarter had on the AI theme and chip sector. The aggregate annual profit growth expected is about 22%. However, 60% of this is in the chip-and-tech equipment sector and only two companies account for 40%: Nvidia Micron. Chart of the Day South Korea's exports grew?at the fastest pace in?nearly a half century last month. This smashed forecasts for a surge in chips sales propelled by a global boom in AI investments. Exports of Asia's 4th largest economy rose by 70.9% from a previous year in June, to $102.25 billion. This is a significant increase from the 53.4% in May. It also marks the biggest annual growth since October 1978. Semiconductor Exports jumped 199.5% to $44.8 billion. South Korea is now the fourth country worldwide after Germany, China, and the U.S.A. Watch today's events * U.S. June ADP payrolls (8:15 a.m. ?EDT), June ISM manufacturing PMI (10 a.m. EDT) Kevin Warsh, Fed chair, speaks at the ECB annual forum in Sintra. Want to receive the Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed by the author are their own. These opinions do not represent the views of News. News is committed to the Trust Principles and to a free, independent, and impartial publication.
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VEGOILS - Palm up on a soft ringgit, but weaker rival oils and crudes cap gains
Malaysian palm futures closed higher on Wednesday after the previous session?declined?. The ringgit was softer, but weaker crude oil and competing edible oils limited gains. The benchmark palm oil contract for September delivery at the 'Bursa Malaysia derivatives Exchange' rose by?11 Ringgit or 0.24% to 4,557 Ringgit ($1,113.64). A Kuala Lumpur based trader stated that the market had been supported earlier by a recovery in rival soyoil and a slightly lower ringgit during the morning Asian session. The palm ringgit's currency has weakened by 0.24% against dollars, making it cheaper for buyers of foreign currencies. Prices of soyoil on the Chicago Board of Trade fell by 0.66%. Dalian's palm oil contract lost 0.59%, while the most active soyoil contract fell by 0.32%. As palm oil competes to gain a share in the global vegetable oil market, it tracks the price movement of its rival edible oils. Crude Oil fell by more than 1%, as the U.S. and Iran continued to negotiate a final deal that would end their war. The market was waiting for the U.S. data on stock drawdowns. Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures. A trade ministry regulation revealed that Indonesia set its crude palm oil reference price at $1,090.90 per tonne for July. As part of the country's push to achieve energy independence, B50 fuel, which is a mixture of 50% palm-based and 50% conventional diesel will be available on Wednesday. Analysts say that the low oil prices and more expensive palm oil are threatening its viability. ($1 = 4.0920 ringgit) 1 Please enter the?codes between brackets to view freight rates for?Peninsula Malaysia/Sumatra from China, India, Pakistan, and Rotterdam. Double-clicking on the bracketed?codes will show terminal users the cash and futures?prices for edible oil. To move to the next page, press F12. To go back, hit F11. 1
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Aluminium and copper both hit a four-month low due to fund liquidation
Aluminum prices fell to their lowest level in four months Wednesday, and copper also lost ground as funds liquidated bullish 'positions due to concerns over rising?U.S. Interest rates and uncertainty about negotiations to end the Iran conflict. The benchmark three-month aluminum on the London Metal Exchange fell 0.9%, to $3,058 per metric ton, by 0930 GMT. It had previously reached its lowest level since February 19, at $3,045.50. Tuesday, metals used for transport, packaging, and construction saw their biggest quarterly and month-to-month declines in years. Ole Hansen is the head of commodity strategy for Saxo Bank, a Copenhagen-based bank. The continued strength of the dollar and the yields staying 'firm' adds weight to these markets. After hitting a six month low, the most traded aluminium contract at the Shanghai Futures Exchange closed daytime trading 1% lower, closing the daytime trade at?22.370 yuan (3,292.47) per ton. The dollar reached a record high against the Japanese yen as the yields on U.S. Treasury bonds rose sharply, while the dollar index remained steady. The dollar is stronger, making commodities priced in U.S. dollars more expensive to buyers using other currencies. The news that Iran refused to meet with U.S. top envoys, who had flown to the region following an outbreak of hostilities clouded the prospects for lasting peace between the two countries. LME 'copper' fell 1.6% to $13,165.50 per ton, after U.S. officials missed a June 30 deadline to announce whether or not tariffs would be applied to refined copper. The losses in 'base metals' were however limited after a survey revealed that the manufacturing sector of China, which is a major metal consumer, expanded for a seventh consecutive month in June, finishing its strongest quarter since late 2020. Other LME metals include zinc, which fell 2%, to $3,480 per ton. Lead also dropped 0.2%, to $1,871, Nickel was down 0.4%, to $16,355, and Tin, which was down 2%, to $50,550. ($1 = 6.7943 Chinese Yuan Renminbi)
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Norsk Hydro Slovak Aluminium Smelter to Partially Restart Production
Norsk Hydro announced 'on Wednesday that its Slovalco aluminum joint venture had reached an agreement with Slovak Government?to partly restart production after?a four-year shut down,?and 'the deal included a new long term power supply contract. Hydro stated that the pact will pave the way for a restart of smelting capacities of 75,000 tons per annum. Production is expected to resume by the fourth quarter of 2026. The remaining 100,000 tonnes of capacity would depend on the conditions after 2030 and any additional power contracts. The resumption of primary aluminium production in Ziar nad Hronom, central Slovakia, would be a huge boost for the European Market, which 'has been left short 'of metal due to the closures of the Mozal smelter, in Mozambique and the EU’s new carbon taxes, as well as the war-driven supply restrictions in the Gulf. Slovalco, owned by Norway's Hydro and Central Europe-focused Penta Investments Group (55.3%) was forced to cease primary aluminium production by September 2022 due to high electricity prices. Hydro stated that the deal outlines the "long-term frame conditions" for aluminium production. This includes a power purchasing pact with the state-owned hydropower utility Vodohospodarska Vystavba, and a compensation plan?for indirect costs of carbon under the EU Emissions Trading System (ETS). Slovalco said in a statement released after a signing event in Bratislava, on Wednesday, that it would invest 100 million euro ($14 million) in order to restart operations. This investment will support over 200 jobs. $1 = 0.8877 euros (Reporting and editing by Elaine Hardcastle, Clarence Fernandez, and Jan Lopatka)
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Gold drops as Fed rate hikes and higher Treasury yields weigh
On Wednesday, gold fell for the third session in a row as?U.S. Treasury yields, as well as growing bets on the Federal Reserve raising interest rates, weighed down on gold. As of 0849 GMT spot gold was down by 0.8% to $3,974.75 an ounce, after reaching its lowest level since November last year at $3942.99 in the previous session. U.S. Gold Futures for August Delivery lost 1.3%, to $3.987.70/oz. On Tuesday, the yellow metal recorded its first quarterly loss in 2024. The benchmark 10-year yield rose as high as 9 basis points on Tuesday, before easing off its peak. On Wednesday, yields were up again by 4 basis points at 4.465%. This was higher than the increase in euro zone bonds yields. Bullion is less affordable to overseas buyers due to a stronger dollar. The market is pricing in more rate increases for this year because of comments made by Fed's Hammack. Beth Hammack, the president of the Federal Reserve Bank of Cleveland, said Tuesday that she might advocate for higher interest rates if inflation continues to rise. CME FedWatch shows that traders expect a rate increase of 67% by September. Staunovo said that the expectation of more hikes is not helping investment demand. ETF holdings saw renewed outflows over recent days. The Fed may change its policy direction based on the June ADP employment report, which is due at 1215 GMT. The markets will also be watching the annual conference of the European Central 'Bank in Sintra on Wednesday. Fed Chair Kevin Warsh, and ECB -President Christine Lagarde both have speeches scheduled. Geopolitically, there are concerns about the prospects of U.S. diplomacy with Iran after Teheran announced it would not be meeting senior U.S. officials. Envoys travelled to the region following the recent outbreak of violence. Spot silver dropped 1.4% to $57.75 an ounce. Palladium fell 1.4% to $1,187.01, down from its lowest level since November. Palladium fell 1.4% to $1187.01. (Reporting and editing by Harikrishnan Nair in Bengaluru, Noel John from Bengaluru)
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Zelenskiy: Ukraine strikes Russian oil refinery, missile component factory
Ukraine has hit a Russian refinery in Ufa for the second consecutive time, Volodymyr Zelenskiy, the president of Ukraine, said on Wednesday. Kyiv is intensifying its strikes in Russia. "Our plan to impose Ukrainian long-range sanction is being implemented every day," Zelenskiy said, referring the Ukrainian attacks deep within Russian territory. "This is a completely just response to everything Russia does against us." Zelenskiy reported that a strike was also carried out on a Russian military-industrial complex he described as "strategic", located in the Penza area, which he claimed made components for missile weapons used by Moscow to attack Ukraine. He said that the site was located about 600 kilometers from the frontline. The Ukrainian General Staff identified the plant as belonging to Roscosmos, a Russian state-owned space corporation. The company said that it produces sensors for cruise missiles and ballistic rockets, components for aircraft electronics, and equipment to support reconnaissance satellites. General Staff reported that two?bridges were also struck in Russian-occupied areas of Ukraine's Donetsk, Luhansk and Donetsk regions as well as the logistics crossing in Donetsk. Analysts say that Ukraine's increased?attacks on Russian military supply lines is part of an ongoing campaign to target Moscow’s logistics behind the frontline. This effort has helped slow down its war machine, after more than four years of conflict. Ukraine's Defence Ministry said that Ukraine's troops hit 11 oil refineries as well as fuel logistic facilities, military factories and other targets in the month of June. Ukraine's SBU security service?also said it had struck hangars housing Russian jet fighters on an airfield in Crimea that?Russia annexed in 2014. Zelenskiy announced last week that he approved a campaign of 40 days to "influence" Russia into ending its five-year war with Ukraine. (Reporting and editing by Andrew Heavens, Sharon Singleton, and Anna Pruchnicka)
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Fuel prices in Nepal are reduced as global prices fall
Nepal has lowered fuel prices up to 17 percent, according to an official statement released on Wednesday. The Himalayan nation reacted to the fall in global prices after progress was made?towards a peaceful resolution of the war iin 'Iran. The sole distributor and importer of fuels in Nepal, the state-owned Nepal Oil Corporation, has reduced retail prices for petrol, diesel and cooking gas. It said that jet fuel prices have dropped by 14.8% for domestic flights from Kathmandu and by 14.47% for international flights from Pokhara. Prices have fallen sharply since recent highs, as fears of supply disruptions in the Middle East waned amid hopes that U.S. and Iranian peace talks would help maintain a fragile ceasefire. Brent and U.S. West Texas Intermediate are both close to the levels they reached on February 27, just before the U.S. and Israel war against Iran began. Brent closed that day at $72.48 a bar and WTI at $67.02. NOC stated that the'movement was a result of lower fuel supply prices received by Indian Oil Corp on Tuesday. Indian Oil Corp is?the lone?supplier to Nepal. It said that the improvement in fuel prices on the global market was to blame. New rates are effective as of Wednesday. Nepal raised petrol and diesel prices?in April,?and began rationing cooking gases in?March because of supply disruptions caused by the Iran War. Nepal, wedged between India and China is completely dependent on fuel imports. (Reporting and editing by Aftab Ahmad, Raju Gopalakrishnan and Gopal Sharma)
Brazilian police arrest members from a gang that was created to spy and kill lawmakers, judges
The Federal Police of Brazil announced on Wednesday that it had arrested five suspects suspected of involvement in a group formed to assassinate and spy on high-ranking politicians and judges.
One source familiar with the investigation stated that the gang was formed by both a civilian and a military officer.
The document, which was seized by police and seen by, reveals that the group went by the acronym C4, which is a reference to the full name Command for Hunting Communists, Corrupt People, and Criminals.
Documents also show that the gang targeted high-ranking judges and senators with 250,000 reais.
Documents stated that the organization used explosives, rifles, and prostitutes to lure in their victims.
The investigation was launched after the police began investigating the murder of a lawyer from the city of Cuiaba in Mato Grosso.
According to the news website UOL a retired colonel who has been imprisoned for over a year now, suspected of being involved in the murder of a lawyer, was one of those targeted during Wednesday's raid.
As part of this investigation, Federal Police officers executed six search warrants in three states across Brazil. (Reporting and writing by Ricardo Brito, editing by Bill Berkrot).
(source: Reuters)