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Markets await Iran response as gold falls amid dollar gains
The gold price fell on Monday, as investors favored the dollar after the U.S. strike on Iran's nuclear sites at the weekend. Markets are closely monitoring Iran's reaction. As of 0341 GMT, spot gold was down by 0.2%, at $3,362.29 per ounce. U.S. Gold Futures dropped 0.2% to $3378. Tim Waterer, Chief Market Analyst at KCM Trade, said that the US strike on Iranian nuclear sites resulted in safe-haven buying flows for the dollar in the currency markets. This USD increase had pegged back gold and caused a subdued performance despite the risks arising from the conflict. Gold became more expensive to other currency holders as the dollar increased by 0.2%. Donald Trump, the U.S. president, raised on Sunday the issue of a regime-change in Iran in the wake of the U.S. strikes that targeted key military sites in Iran over the weekend. Senior officials in the Trump administration warned Tehran to refrain from retaliation. The U.S. dropped bunker-busting bombs weighing 30,000 pounds onto the mountain that overlooks Iran's Fordow Nuclear Site. Iran and Israel have continued to exchange missile attacks. Israeli military spokeswoman said Israeli fighter planes struck military targets in west Iran. Oil prices briefly reached five-month highs on Monday, and shares fell in Asia. But there was no panic selling. In the Federal Reserve's latest report on monetary policy to Congress, published on Friday, it was stated that U.S. inflation remained elevated, and the labor markets were solid. According to Wang Tao, technical analyst, the spot gold price may test support at $3348 an ounce. A break below this level could lead the way towards $3324. Other metals rose in price as well. Spot silver increased 0.2% to $36.07 an ounce. Platinum edged up 0.1% to $1.269.17. Palladium gained 0.2%, to $1.046.62.
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Dalian Iron Ore reaches a new high in a week on the back of improved China demand
Dalian iron-ore futures prices reached their highest level in over a week on Monday, boosted by improved short-term prospects for steelmaking ingredient China. The September contract for iron ore on China's Dalian Commodity Exchange ended the morning trading 0.5% higher, at 706 Yuan ($98.22). In the morning session, prices reached 709.5 yuan - their highest level since June 13. The benchmark July Iron Ore at the Singapore Exchange rose 0.15% to $93.65 per ton. According to Chinese consultancy Mysteel, hot metal production, which is a measure of iron ore consumption, increased 0.24% on a weekly basis to 2.422 millions tons as of 20th June. Everbright Futures, a broker, said: "Hot metal production is expected to remain stable in the short-term, which will support iron ore prices." Broker Galaxy Futures stated that the construction materials consumption in China has already weakened as we enter the off-season. The rainy season, which usually begins in June, has already begun and is further dampening the demand. Mysteel, in a separate report, said that the capacity utilisation rate for China's electric arc furnace steelmakers dropped 2.2% from week to week to a low of 54.5%. It attributed this to persistently negative margins. Steelhome data shows that the total stockpiles in China of iron ore increased by 0.9% on a weekly basis to 134.6 millions tons as of 20 June. The dollar index rose 0.12% Monday, mainly due to safe-haven demand. Dollar-denominated investments are less affordable for holders of currencies other than the greenback. Coke and coking coal, which are both used to make steel, traded in a sideways fashion. The benchmark steel prices on the Shanghai Futures Exchange have fallen. Hot-rolled coil, wire rod and rebar all fell around 0.2%. Stainless steel also lost 0.4%.
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After Congo extended its export ban, China cobalt prices hit a 3-month high.
The price of cobalt in the top consumer China rose to a three-month high Monday as the Democratic Republic of Congo extended its export ban, rekindling supply concerns. Congo, world's largest cobalt producer, has extended its ban for another three months, after having imposed a four month restriction in February, to reduce the oversupply of this material used in electric vehicle batteries. The cobalt futures contract with the most activity on China's Wuxi Stainless Steel Exchange rose more than 9%, reaching its highest level since March 14, at 254 yuan (US$35.34) a kilogram. Analysts at Guosen Metal stated that "the seven-month ban on exports by Congo will reduce global supply of cobalt by over 100,000 metric tonnes and will cause a shortage in supply in the domestic market." Export ban was caused by the cobalt price hitting historically low levels. This was due to weak demand by automakers, and miners increasing output of copper (from which cobalt can be extracted as a co-product) in order to take advantage of high prices. Reports earlier in the month stated that the Congo government had suspended the export of battery materials. Glencore declared force majeure for some of its cobalt deliveries. Reporting by Amy Lv, Lewis Jackson and Sumana Niandy; editing by Sumana Naandy.
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South Korea's industry ministry raises concern over US attack on Iran
On Monday, the vice minister of industry in South Korea expressed concerns about the possible impact that recent U.S. attacks on Iran could have on the country's economy. At a meeting held to monitor monthly exports by the Ministry of Industry, Moon Shin-hak, first vice minister for industry, said: "As Middle East situation enters new phase because of the U.S. strike on Iran's nucleus facilities, we are concerned about the impact it will have on our exports." South Korea has Asia's largest economy, and is heavily dependent on exports. On Sunday, officials held an urgent security meeting to assess potential economic impacts of the U.S. war action. Seoul's dependence on crude oil imports - 72% of all imports - from the Middle East has increased. The oil prices rose on Monday, reaching their highest level since January. Market participants are preparing for more price increases amid fears of a possible Iranian retaliation that could include the closure of Strait of Hormuz through which a fifth of world crude oil supply passes. His office announced earlier that South Korean President Lee Jae Myung would not be attending the NATO summit in this week due to the uncertainty caused by the Middle East crisis. (Reporting and editing by Kate Mayberry; Ju-min Park)
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Aluminum outperforms Copper on Energy Cost Concerns amid US-Iran Tensions
The most traded contracts on London and Shanghai exchanges surged as U.S. attacks on Iranian military sites pushed up energy prices, a major cost factor for this energy-intensive metal. LME's three-month contract for aluminium rose up to 3.3%, to $2.634.5 per ton. However, it then eased to $2.580.50 (up 1.22%) by 0101 GMT. The SHFE's most-traded aluminum contract rose 0.54% to 20,525 yuan per metric ton ($2,859.23). Comparatively, LME copper rose 0.16%, to $9,648.5 yuan, while SHFE copper grew 0.31%, at 78.420 yuan. The aluminum price is sensitive to energy prices. It has therefore reacted strongly to oil costs. Now, the question is whether Iran will close the Strait of Hormuz, said a Beijing metals analyst of a futures firm, who requested anonymity. He said that the Strait of Hormuz was crucial for the Middle East's bauxite, alumina, and power shipments. Power accounts for 40% of total costs in aluminium melting. U.S. president Donald Trump raised the issue of regime change in Iran on Sunday following U.S. attacks against key military sites at the weekend. Senior officials in his government warned Tehran against retaliation. Brent crude futures rose 2.44% to $78.89 per barrel as of 1122 GMT. This was the highest price since January. LME Zinc contract rose 0.5% to $2643 per ton. Lead increased 0.1%, to $1994.5. Tin fell 0.1%, to $32,650. SHFE tin rose 1.2%, to 263,950 Yuan per ton. Lead increased by 0.4%, to 16,925 Yuan. Zinc went up by 0.3%, to 21,980 Yuan. Click or to see the latest news in metals, and other related stories. DATA/EVENTS (GMT) 0715 France HCOB Mfg, Services, Composite Flash PMI June 0730 Germany HCOB Mfg, Services, Composite Flash PMI June 0800 EU HCOB Mfg, Services, Composite Flash PMI June 0830 UK Flash Composite, Manufacturing, Services PMI June 1345 US S&P Global Mfg, Svcs, Comp PMI Flash June 1400 US Existing Home Sales May
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Oil reaches five-month high following US attack on key Iranian nuclear sites
The oil prices rose on Monday, reaching their highest level since January. This was due to the United States joining Israel to attack Iran's nuclear sites. Brent crude futures were up $1.92, or 2.49%, at $78.93 per barrel as of 17:00 GMT. U.S. West Texas Intermediate Crude advanced $1.89, or 2.56%, to $75.73. The two contracts had risen by over 3% in the previous session, to $81.40, and $78.40 respectively. They reached five-month highs, before giving back some of their gains. Prices rose after U.S. president Donald Trump announced that he had "obliterated", Iran's nuclear sites with strikes last weekend. Trump joined an Israeli assault as conflict escalated in the Middle East, and Tehran pledged to defend itself. Iran is OPEC’s third largest crude oil producer. Market participants are expecting further price increases amid growing fears that a retaliatory move by Iran could include the closure of Strait of Hormuz through which approximately a fifth of world crude oil supply passes. Press TV in Iran reported that the Iranian Parliament had approved a plan to close the Strait. Iran has threatened to close strait in the past, but never actually followed through. Sparta Commodities analyst June Goh said that the risks of damage to oil pipelines have multiplied. Even though there are other pipeline routes to the Strait of Hormuz, some crude oil will not be able to be exported if it becomes inaccessible. She added that shippers would increasingly avoid the region. Goldman Sachs stated in a report published on Sunday that Brent oil could temporarily peak at $110 a barrel if oil flow through the waterway was halved over a period of a month and remained down by 10% the next 11 months. The bank assumed that there would be no disruption in the oil and gas supply. It added global incentives for preventing a large and sustained disruption. Brent has increased by 13% since the conflict started on June 13 while WTI is up around 10%. Analysts said that the current geopolitical premium will not last long without a tangible disruption in supply. Ole Hansen of Saxo Bank's commodity strategy wrote on Sunday that the unwinding some long positions following a recent rally in oil prices could cap any upside. (Reporting and editing by Himani Sarkar in Singapore, Christopher Cushing and Siyi Liu)
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IAEA: US attack on Iran's Isfahan nuclear site has destroyed entrances to tunnels, according to the IAEA
U.S. strikes on the Isfahan complex, which houses Iran's vast uranium-enriched stockpile, caused damage to the tunnels that store a portion of the uranium. The U.N. nuclear watchdog confirmed this Sunday. The International Atomic Energy Agency issued a statement saying that "we have established that the entrances to the underground tunnels on the site were affected." Isfahan is the site where officials have said that a large amount of Iran's highly enriched uranium is stored. Rafael Grossi, chief of IAEA, confirmed in a statement made to the U.N. Security Council shortly after the IAEA's statement that the tunnels were part of an area used to store the stockpile. He said that the entrances to the tunnels for storing enriched material had been damaged. Officials in Iran have stated that they will take measures to protect their country's nuclear materials without notifying the IAEA. Grossi said Iran can do this while respecting its obligations under the Nuclear Non-Proliferation Treaty. The Agency and Iran can agree on any special measures that Iran takes to protect its nuclear material and equipment. Grossi told Security Council that this was possible. (Reporting and editing by Francois Murphy, Chris Reese, Ni Williams)
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US strikes on Iran shattered hopes for nuclear diplomacy
Foreign ministers of Europe's three largest powers met their Iranian counterparts in Geneva on Friday to try to diffuse the tensions over Iran's nuclear program. These hopes were dashed Saturday, when U.S. president Donald Trump ordered airstrikes against Iran's main nuclear sites in support of Israel’s military campaign. Abbas Araqchi - Iran's Foreign Minister - told reporters in Istanbul, Sunday, that it was "inappropriate" to ask Iran to resume diplomacy. He promised a "response", to the U.S. strike. It's not the time for diplomacy. Trump warned that the U.S. would attack other Iranian targets if a peace agreement was not reached in his televised address on Saturday. He also urged Tehran to come back to the negotiation table. Seven Western diplomats and analysts said that the prospects of negotiations were negligible for now. Washington's demands for Iran to stop enriching its nuclear fuel and Tehran's refusal abandon its nuclear program are not able to be bridged. James Acton is co-director of Carnegie Endowment for International Peace's Nuclear Policy Program, a Washington-based think tank. "I am more concerned about the escalation of the situation, both on the short-term and long-term." According to European Diplomats, Trump's decision not to strike Iran was not communicated to the three European Allies, Britain, France, and Germany, in advance. Emmanuel Macron, the French president, had promised to speed up the nuclear talks on Saturday - before the U.S. strike - after a phone call with his Iranian counterpart. Unidentified European diplomats acknowledged that a second planned meeting with Iran could not be held in the next week. After the U.S.'s military action, it appears that any diplomatic role played by Europe will be secondary. Trump dismissed Europe's efforts to resolve the crisis on Friday, saying Iran wanted only to talk to the United States. Analysts and three diplomats said that any future talks between Iran, and Washington, would most likely take place through Oman or Qatar as regional intermediaries, after Tehran decides what to do in response to U.S. strikes on its nuclear sites of Fordow, Natanz, and Isfahan. Iran has few options left after the attacks. Some in Tehran have suggested that since Israel launched its military campaign against Iran, on June 13, Iran could withdraw from the Nuclear Non-Proliferation Treaty to show their determination to speed up enrichment. However, experts warn this would be a significant escalation which would likely draw a strong response from Washington. Acton of the Carnegie Endowment said that Iran's short-range missiles are the most obvious way to retaliate. These could be used against U.S. assets and forces in the region. He said that any military response from Iran would be fraught with danger. "On one hand, the Americans want a response strong enough to make them feel that the U.S. paid a real price. He said that on the other hand they do not want to encourage a further escalation. Three diplomats say that the European effort ended in failure. Even before the U.S. strike, the talks on Friday in Geneva were a complete failure. There was a huge gulf between the two parties and no concrete proposals were made. Diplomats believe that their mixed messages may have undermined the efforts of both sides. The European position on Iran's enrichment programme has hardened over the last 10 days, as a result of the Israeli airstrikes and the threat of U.S. aerial bombardment. Three years later, during Trump's first term, the three European powers (known as E3) were party to a nuclear agreement signed in 2015. The Europeans and Tehran both believed that they understood how to reach a realistic agreement, given that the E3 has been dealing with Iran’s nuclear program since 2003. The Europeans had a difficult relationship in the last few months with Iran, as they tried to exert pressure on it regarding its ballistic missile programme, its support for Russia and the detention of Europeans. Two European diplomats say that France, the country most eager to negotiate, has suggested in recent days that Iran should move toward zero enrichment. This was not a demand of the E3 until recently, given Iran's redline on this issue. Diplomats reported that Britain also took a more aggressive stance in Geneva. This was in line with Washington. The new German government also appeared to be moving in the same general direction, albeit with more nuance. One EU official said that Iran will eventually have to accept the zero enrichment policy. On Saturday, a senior Iranian official expressed disappointment with the Europeans’ new stance. He said that their demands were “unrealistic”, without giving any further details. In a short joint statement issued on Sunday that acknowledged the U.S. airstrikes, the European countries stated they would continue to pursue their diplomatic efforts. The Europeans said they were ready to help "in coordination with other parties" and called on Iran to enter into negotiations that would lead to an agreement that addressed all concerns related to its nuclear program. David Khalfa is the co-founder of Atlantic Middle East Forum in Paris, which is a think tank. He said that the government of Supreme Leader Ali Khamenei had abused the Europeans to gain time while developing its nuclear program and missile capabilities. He said, "The European effort ended in failure." The Europeans have one more important card. As parties to the nuclear agreement, they are the only ones that can use the "snapback" mechanism, which will reimpose previous UN sanctions against Iran if the deal is violated. Diplomats reported that, before the U.S. strike, the three countries discussed a deadline of the end of August to activate the system as part a "maximum-pressure" campaign against Tehran. The U.S. has "MULTIPLE CHANNELS" for its talks Officials from the United States said that the U.S. had launched 75 precision-guided weapons, including over two dozen Tomahawk missiles and more than one hundred and fifty military aircraft, in their operation against three nuclear sites. US Defense Secretary Pete Hegseth warned Iran on Sunday against retaliation, and said that both public and personal messages were sent to Iran through "multiple channels" to give them the opportunity to negotiate. Five rounds of indirect talks between the United States, and Iran have failed after the U.S. proposed at the end May that Iran abandon its uranium-enrichment program. Tehran rejected it, and Israel launched its attack against Iran after Trump's deadline of 60 days for talks expired. Iran has said repeatedly since then that it will not negotiate during a war. Two European diplomats and a senior Iranian official claim that Washington reached out to Iran even after Israel's strike to restart negotiations. It offered a meeting in Istanbul between Trump and Iranian president Masoud Pesekhkian. Three diplomats said that Iran rejected the offer, but Araqchi continued to maintain direct contact with US Special Envoy Steve Witkoff. Experts say that one of the biggest challenges of engaging with Iran is the fact that it's impossible to know the full extent of damage done to the country's nuclear program. The IAEA is severely restricted in accessing Iranian sites. It's unclear whether Tehran has hidden any enrichment facilities. According to a senior Iranian source, most of the highly-enriched uranium from Fordow, which produces the majority of Iran's uranium that is refined up to 60%, was moved to an unnamed location prior to the U.S. strike there. Acton of the Carnegie Endowment said that, despite the physical damage to Iran's installations, thousands of scientists, technicians, and engineers were involved in its enrichment program. Most of them had survived U.S. Acton said, "You can't blow up knowledge." (Additional reporting in Brussels by Lili Bayer, Andrew Gray and Tom Perry; editing by Daniel Flynn.)
Oil reaches five-month high following US strikes on key Iranian nuclear sites
The oil prices rose on Monday, reaching their highest level since January. This was due to the supply concerns caused by Washington's decision to attack Iran's nuclear sites with Israel.
Brent crude futures were up $1.88, or 2.44%, at $78.89 per barrel as of 1122 GMT. U.S. West Texas Intermediate Crude advanced $1.87, or 2.53% to $75.71.
The two contracts had risen by over 3% in the previous session, to respective highs of $81.40 and $79.40 (five-month highs), before reversing some gains.
Prices rose after U.S. president Donald Trump announced that he had "obliterated", Iran's nuclear sites with strikes last weekend. Trump joined an Israeli assault as conflict escalated in the Middle East, and Tehran pledged to defend itself.
Iran is OPEC’s third largest crude oil producer.
Market participants are expecting further price increases amid growing fears that a retaliatory move by Iran could include the closure of Strait of Hormuz through which approximately a fifth of world crude oil supply passes.
Press TV in Iran reported that the Iranian Parliament approved a plan to close the Strait. Iran has threatened to close the Strait in the past, but never actually followed through.
Sparta Commodities analyst June Goh said that the risks of damage to oil pipelines have multiplied.
Even though there are other pipeline routes to the Strait of Hormuz, some crude oil volumes will not be able to be exported if it becomes inaccessible. She added that shippers would increasingly avoid the region.
Brent has increased by 13% since the conflict started on June 13 while WTI is up around 10%.
Analysts said that the current geopolitical premium on risk is unlikely to continue without a tangible disruption in supply.
Ole Hansen of Saxo Bank's commodity strategy wrote on Sunday that the unwinding some of the positions taken after the recent price rally may cap the upside in oil prices. (Reporting from Siyi Liu, Singapore; Editing and proofreading by Himani Sarkar.)
(source: Reuters)