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Gold prices rise on demand for safe-havens as Trump escalates his trade war
Gold prices rose on Friday for a third consecutive session, after U.S. president Donald Trump announced new tariffs against Canada and threatened broader tariffs against other trading partners. As of 0755 GMT, spot gold rose 0.5% to $3339.99 an ounce. U.S. Gold Futures rose 0.8% to $3351. We're seeing a growing demand for gold, as a safe haven. Investors are looking for a safe asset, despite the stock market's highs. Any dip in gold will be seen as an opportunity to buy now," said Carlo Alberto De Casa. Trump announced on Thursday that the U.S. will impose a tariff of 35% on imports coming from Canada, and plans to impose blanket duty rates of 15% or 20 % on other trading partners. The announcement follows a 50% tariff announced on Wednesday on U.S. imports of copper and a similar tax on Brazilian goods, as well as tariff notifications sent to other trading partners earlier. Trump said that the European Union would receive a letter about tariff rates on Friday. This puts into question the progress in trade negotiations between Washington and the 27 nation bloc. The prospect of a slowdown in the economy has boosted demand for safe-haven assets like gold. Analysts at ANZ noted that the Fed's more dovish stance is also boosting investors' appetite. The data on Thursday revealed Weekly jobless claims dropped unexpectedly in the U.S. to a low of seven weeks, which indicates stable employment levels. Christopher Waller, the Federal Reserve governor, reiterated on Thursday his belief that the central bank can cut interest rates during its policy meeting in late August. The President of the Fed Bank of San Francisco is also a Fed Bank official Mary Daly Two rate cuts are still on the table this year. Gold that doesn't yield is more appealing because of lower rates. Silver spot rose 0.9%, to $37.37 an ounce. Platinum fell 1%, to $1.346.81, and palladium increased 1.3%, to $1.156.44. (Reporting and editing by Joe Bavier in Bengaluru, Brijesh Patel from Bengaluru)
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Reliance claims that India must increase its petchem production to counter China's dominance.
A senior Reliance Industries official stated on Friday that India must increase its petrochemical capacity to meet the local and global market demand, and to contain China's increasing dominance in the sector. The margins on petrochemicals have been shrinking around the globe as China's capacity growth has created an excess. Some refiners can produce petchems up to 40-50% of the total output, which is more than twice what India typically produces. India's petrochemical consumption for now is only a fraction of global average, but it is expected to increase as the nation's economy grows. Many analysts believe that India's economy is growing at the fastest rate of any major country, while China is stagnating, and its demand for gasoline and gasoil has peaked. The use of these two auto fuels in India is still increasing, but at a slower rate as the country tries to switch to cleaner fuels. Vikram Sampat is senior vice president, strategy and business, for Reliance Industries' polyester chain. He told an industry gathering that China had taken over the "entire petrochemical sector" and India must take action. He said, "If we do not act now, China will grow." Sampat stated that Reliance's overall portfolio has a 20% petrochemical production capacity. Analysts predict that Indian refiners are going to increase their focus on the petrochemicals in order to maintain margins and grow as demand for fossil-fuel transport fuels reaches its peak. Sampat expects that refiners will redirect 30-50% of gasoline production to petrochemicals if the petrol demand spikes. If diesel demand peaks the percentage of output that goes into petrochemicals can rise as high as 50%-70%. (Reporting and editing by Barbara Lewis; Nidhi verma)
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Copper's positive long-term trajectory remains unchanged despite US tariffs, Barrick CEO states
Mark Bristow, CEO of Barrick Mining Corp, said that copper miners are still optimistic about the future prospects of the metal, despite a 50% tariff looming in the United States, which will cause short-term volatility. The company is expanding operations in Zambia. U.S. president Donald Trump announced on Wednesday that he will impose a new copper tariff starting August 1, to encourage the domestic development of a critical industry for defence, electronics, and automobiles. The announcement pushed U.S. Comex Copper Futures to a record high. Analysts predict that prices outside of the U.S. may be affected as countries such as Chile, which is the top copper producer in the world and the United States’ largest supplier, move their supplies elsewhere to respond to the tariffs. Bristow, speaking to journalists late Thursday in Zambia's capital Lusaka, said that the copper price would be volatile, just like all other commodities. We will need to find a way to overcome this instability. He said, however, that despite the fallout of U.S. policy decisions on tariffs, copper's trajectory over time remained unchanged. Bristow stated that "we are experiencing a shortage of supply and a growing demand, particularly in the data centres and the move to cleaner energy. He said: "So everyone agrees that the demand for copper is growing faster than the supply." Barrick, which is the second largest gold producer in the world by output, after Newmont's, is investing to boost its copper production. The company is implementing a $2 billion project to double the annual production of its Lumwana Copper Mine in Zambia from 140,000 metric ton to 240,000 by 2028. Barrick will extend the life of the mine to 2057. Bristow stated that most copper companies are only interested in marginal expansion. "We're very happy that we committed to investing ahead of the tightening."
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As markets digest US tariffs, copper prices are ranging as they wait for clarity
The London Metal Exchange (LME) and Shanghai Futures Exchange (SFE) were both range-bound Friday. After an initial shock following the U.S. announcement that it would impose a 50% tariff starting August 1, the market was waiting for more details. As of 0701 GMT, the LME's three-month copper was down 0.09% to $9,691.5 a metric ton. The contract is down 1.75% this week and could be headed for a second consecutive weekly decline. The Shanghai Futures Exchange's most traded copper contract edged up 0.05% to 78.430 yuan (10,937.87) but ended the week with a decline of 2.05% after gains the previous two weeks. After President Donald Trump announced tariffs to promote domestic development in a key defense, electronics and automobile industry, the copper prices have stabilized for now. The metals analyst of a Beijing futures company, who requested anonymity, said that "uncertainties have remained" such as the copper products included in the tariff structure, whether or not the 50% is final, whether it can be adjusted or if there will be a delay to the implementation date. The COMEX premium was $2,615 per ton in the previous session. This is 27% more than the LME, but it has dropped slightly since its peak. So far in this year, traders have sent roughly the equivalent of a full year's supply of copper to America. Analysts said that with so much copper being shipped to the U.S. a 50% increase in COMEX-LME premium is not realistic. However, a 40% increase is possible if the tariff goes into effect as announced. LME lead dropped 0.86% on Friday to $2,026.5 per ton and tin fell 0.76% to 33,305. SHFE nickel rose 1.23%, to 121 390 yuan per ton. Zinc was up 0.43%, at 22,380, whilst aluminium was up 0.12%, at 20,695; lead dropped 0.81%, to 17,075, while tin fell 0.4%, to 263,940. Click or to see the latest news in metals, and other related stories.
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Sources: China smelter company decides to not set Q3 copper fee guidance
Sources said that China's leading copper smelters chose not to set guidance for an important copper processing charge during the third quarter. This is the second time they have done this in a row, as the industry struggles with a tight supply of concentrate. Four sources who had knowledge of the issue but were not authorized to speak to the media said that the decision was taken at a meeting on Friday of the China Smelters Purchase Team. The CSPT is a group made up of China's sixteen largest smelters, who are expected to follow the guidelines in spot copper concentrat deals. The decision reflects an exceptional tightness on the copper market. The fight to obtain ore has reverted the standard commercial logic, leading to a situation in which spot fees are in negative territory since December last year. This means that smelters are paying miners for the ore they process, instead of doing it the other way round. Chinese smelters reached an agreement with Antofagasta, a Chilean miner, to pay $0 per metric tonne and 0 cents a pound for treatment and processing. The negotiations took place at the mid-year point last month. Smelters saw the agreement to process concentrate at no cost as a victory. (Reporting and editing by Christian Schmollinger, Muralikumar Anantharaman and Amy Lv)
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As Australia's PM Albanese travels to China, he will be focusing on security and trade.
On Saturday, Australian Prime Minister Anthony Albanese will depart for Shanghai in an official visit to China. Regional security tensions as well as efforts to increase economic ties is likely to dominate the talks. Albanese is traveling with Rio Tinto executives, BHP executives, and Fortescue executives to hold business events over six days in three different cities. Albanese, a reporter on Friday, said: "The relationship with China means jobs for Australia. It's that simple." Albanese will make his second trip to Beijing where he'll meet President Xi Jinping. This visit comes after Canberra increased screening of Chinese investments in minerals that are critical and while U.S. president Donald Trump is roiling the global economy by imposing sweeping import tariffs. Albanese has yet to meet Trump after the scheduled G7 talks were cancelled because the U.S. President left early. The United States is Australia's main security ally. Nuclear submarine partnership amid concerns that selling submarines in Australia could weaken U.S. military deterrence against China In a speech delivered in Malaysia on Friday, Foreign Minister Penny Wong said that China's nuclear and conventional militarism was "worrying", with the aim of changing the regional balance of power. AUKUS, she stated, contributed to "collective dissuasion in our region." Richard Maude (a non-resident fellow at the Asia Society and a former Australian intelligence chief) said Albanese had to not only expand Australia's economic relationship with China, but also "make it clear to Australia's closest partners and the Australian public, that Australia is speaking clearly and honestly to China about aspects that are concerning us". In February, the Chinese navy conducted live-fire drills in the Tasman Sea in between Australia and New Zealand without any advance warning. There have also been tensions between Australian and Chinese aircraft in the disputed South China Sea. Maude, the author of Australia's 2017 white paper on foreign policy, says that while Beijing is eager to advance ties, its proposals on cooperation in artificial intelligence have already been met with a cold response. Australia's bilateral trade with China accounted for A$312billion last year. This is a quarter of the total Australian trade. Since 2020, when China banned A$20 billion of Australian exports in an unofficial manner, the relationship has stabilised. Albanese, a reporter on Friday, said that direct engagement with Chinese leaders is important for Australia's safety. He said: "We work together where we can, and disagree when we have to. We are able to hold honest discussions about the differences that exist." Jim Chalmers, Treasurer of Canada, has stated that economic ties to China are not only a priority but also a complex issue. Beijing is likely to raise Australia's increased scrutiny of Chinese investments in minerals, renewable energy, and key infrastructure, according to company executives, even though Chalmers stated on Tuesday that Australia would not reduce its scrutiny. Maude said, "The Government understands that it is not in Australia’s national interest for China to further stranglehold the crucial minerals supply chain", Geoff Raby is a former Australian Ambassador to China. He said that China will probably increase its ambitions to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which Australia leads. Raby stated that the most dangerous thing to do is to adopt policies which force China to become even more isolated or encourage domestic forces within China to favour policies more inward looking. Albanese is scheduled to meet with businesses in Shanghai, then travel to Beijing to participate in the annual leaders' dialog with Premier Li Qiang and to host a roundtable of companies. She will also visit Chengdu, a city located southwest of China. (Reporting and editing by Kate Mayberry in Sydney)
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Australian rare earth stock soars on MP Materials' multibillion US dollar deal
The shares of Australian rare-earths miners including Lynas, Iluka Resources and MP Materials, which is based in the United States, surged on Friday following a multi-billion dollar deal between MP Materials and the U.S. Government to increase production of rare-earth magnets. Lynas Rare Earths - the largest rare earths producer in the world outside China - surged up to 20%, reaching its highest level since mid August 2022. It was on track for its best day ever since April 2020. Iluka's intraday gains were the highest ever, with a 27% increase. As of 0558 GMT, the stocks were the biggest gainers in the benchmark ASX 200, which was also on the rise. The U.S. Department of Defense's (DoD) deal with MP Materials has lifted the mood for Australian rare-earth firms. The deal comes after China placed restrictions on rare Earths last month, which led to a 75% decline in rare earth magnets exported from the country and forced some auto manufacturers to suspend production. Rare earths are 17 metals that can be used to produce magnets, which are essential in the production of cars, electric vehicles, auto parts, electronics, and weapons. The DoD, as part of this deal, will become the largest shareholder of MP Materials, and guarantee that the two most common rare earths are priced at $110 per kilo, almost double the current market price in China. This signals a strong U.S. effort to achieve rare earth magnet autonomy, which increases the upside risk for rare earth prices. Jefferies noted that Lynas appeared to be the next logical recipient of government market assistance. We see the resetting the pricing metrics of rare earths as providing material upside potential for Lynas earnings in the short term, and an increased possibility for de-risking its growth projects through government entity funding. The brokerage raised its price target from A$6.40 to A$10 per share, and upgraded Lynas from "underperform". Lynas's last price was A$9.67. Sayona Mining, a smaller lithium player, and Liontown Resources both saw their shares rise by 2.8% and 1.6% respectively. (Reporting and editing by Sonia Cheema in Bengaluru, with John Biju reporting from Bengaluru)
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ASIA GOLD-Demand is sluggish as volatility in prices affect sentiment
The demand for physical gold was sluggish across the major Asian markets this week as volatility in prices weighed on sentiment. Premiums in China remained firm, while discounts in India were narrowing. Dealers in the top consumer China have charged premiums between $10 and $25 per ounce above the global benchmark spot rate, compared to premiums between $4.2-$33 from last week. On Wednesday, spot gold dropped to its lowest levels in more than a week, dropping below the $3300 mark. It then recovered to trade at $3335 by 0520 GMT Friday. In recent days, U.S. president Donald Trump has expanded his trade war, announcing levies against several countries that will take effect August 1. Hugo Pascal said that this uncertainty failed to spark a renewed interest for gold purchases in China during the week. China's central banks issued new anti-money-laundering and counter-terrorism funding regulations that target precious metals and gem dealers, according to the state news agency Xinhua. A precious metals trader based in mainland China said that "this regulation" will kill some potential onshore demand. He added that gold demand could only increase when prices reach $3,000 to $3,100. Meanwhile, Indian dealers' discounts The price of gold has dropped to as low as $8 per ounce, including 6% import duties and 3% sales taxes, down from $14 last week. A Mumbai-based bullion seller with a private banking firm said that discounts are slowly narrowing because of limited supplies. Imports were low between May and June, and scrap is also scarce. The price of domestic gold per 10 grams was around 97.300 rupees (1,133.57 dollars) on Friday, after reaching an all-time high of 101.078 rupees in the previous month. During the monsoon period, which spans from June to September, gold demand in India is usually subdued. In Hong Kong, gold In Singapore, the price was $1.50 higher than in Singapore. Gold traded at par prices with a $2.20 price premium. In Japan, bullion The premium was $0.50. (85.8350 Indian Rupees = $1)
US stocks fall, Treasury yields increase; Trump tax-cut plan in sight
The major stock indexes showed mixed results on Tuesday with U.S. shares easing, but U.S. Treasury Yields rising as investors focused their attention on the critical U.S. Presidential vote that took place in Washington.
Donald Trump
Tax cuts for all.
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Capitol Hill urged Republican legislators to settle their differences on a bill to extend tax cuts for 2017 from Trump's initial term.
Investors worry that the bill could increase the U.S. deficit faster than expected.
Moody's Investors Service, a credit rating agency in the United States, downgraded its credit rating on Friday evening. This sparked concerns over the U.S. government's debt.
"With the Republican Bill still in the air, it's just enough to make people a bit more cautious, and maybe use this recent rally to trim a bit of their portfolio (of stocks)," said Rick Meckler.
S&P 500 registered a six-day streak of gains on Monday.
Investors awaited comments from Federal Reserve officials. Traders currently expect at least two rate cuts of 25 basis points from the Fed before the end 2025.
The Dow Jones Industrial Average dropped 74.64, or 0.1%, to 42.717.94. The S&P 500 declined 13.78, or 0.2%, to 5,950.01, and the Nasdaq Composite was down 64.75, or 0.3%, at 19,150.81.
Home Depot's sales for the first quarter were better than Wall Street expectations, but the retailer was still down 0.1% compared to the overall market.
European
stocks edged
Utilities and telecom companies lead the gains.
MSCI's global stock index rose by 0.11 points or 0.01% to 882.50. The pan-European STOXX 600 rose by 0.68% while Europe's FTSEurofirst 300 rose by 14.86 points or 0.68%. Germany's DAX reached a new record high.
China's blue chip index rose 0.54%, after the central bank of China cut its benchmark lending rates for first time since October.
The yield on the benchmark 10-year U.S. notes increased 1.2 basis points from late Monday to 4,487%.
After touching 5.037% Monday, the 30-year bond yield has gained 4 basis points and is now at 4.981%.
The yields of Japanese government bonds with a super-long maturity date reached all-time records on Tuesday. A poor auction of securities with a 20-year maturity was the immediate cause of this.
The Japanese yield on the 20-year bond JP20YTN=JBTC> has jumped up to 15 basis points, reaching 2.555%. This is its highest level since 2000. And, for the 30-year bond, it reached a new record of 3.14%.
Investors waited for more Fed officials to comment before the U.S. Dollar declined.
The dollar fell against the yen in late morning trading. It reached a two-week low at 144.095 yen. Last down 0.1%, at 144.64yen. It has fallen in five out of six sessions.
The Australian dollar plunged against the U.S. Dollar after the Reserve Bank of Australia lowered benchmark interest rates 25 basis points. The Aussie last fell 0.9% to US$0.6401.
Canada's inflation rate slowed to 1.7% annually in April, which was higher than the 1.6% economists had predicted. The Bank of Canada closely monitors two of the three key measures of inflation. They also reached 13-month highs due to underlying price pressures.
U.S. crude dropped 0.69%, to $62.26 per barrel. Brent was down to $65.11 a barrel on the same day.
Spot gold increased by 0.42%, to $3243.21 per ounce.
(source: Reuters)