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Investors watch trade developments as gold rises amid weaker dollar
Gold prices rose on Monday as a result of a weaker dollar and investors sought to gain clarity about trade developments before the deadline for U.S. import tariffs on August 1. By 0751 GMT, spot gold had risen 0.5% to $3,365.49 an ounce. U.S. Gold Futures increased 0.5% to $3373.20. The modest support...comes primarily from the weaker U.S. Dollar. The market will focus on trade deals or tariffs as the August 1 tariff deadline approaches, said UBS commodity analysts Giovanni Staunovo. The dollar has weakened by 0.2% compared to a basket other major currencies. This makes gold cheaper for holders of the currency. Howard Lutnick, U.S. commerce secretary, said that he is confident in the United States' ability to secure a deal with the European Union. However August 1st is the hard deadline by which tariffs will be implemented. In an environment of low interest rates, gold, which is often considered to be a safe haven during times of economic uncertainty, does well. After its decision last month to keep rates unchanged, the U.S. Federal Reserve will hold its next policy meeting on July 29-30. "Higher inflation expectations and positive economic data weigh on expectations about the number of Fed rates cuts this year. ANZ analysts stated that the buy-on dip strategy is still in place to protect gold price downside risks. Last week, Fed governor Christopher Waller reiterated his belief that the U.S. Central Bank should reduce rates next week. The data showed that China, the world's largest gold consumer, saw its imports fall for the second consecutive month in June. China's platinum imports in June were down 6.1% compared to the previous month. Silver spot rose 0.6%, to 38.39 cents per ounce. Platinum was up 1.8%, to $1,447.30, and palladium, at $1,259. (Reporting and editing by Kirby Donovan in Bengaluru, Anmol Choubey from Bengaluru)
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Analysts are optimistic about Reliance's expansion of green energy
Analysts are more confident in Reliance Industries, its newest business unit. Many see it as the next major growth engine for this Indian conglomerate. The firm of billionaire MukeshAmbani revealed Friday the progress made in a $10 Billion investment to develop its clean energy portfolio, and reach net-zero emissions of carbon by 2035. The investment was announced for the first time in 2021. The group is expecting to operationalise their planned clean energy factories within the next four to six quarters. After that, the business will self-fund through partnerships for financing and offtake. Nomura analysts stated in a Monday note that they believed the new energy business would be Reliance's next growth driver. The company aims to achieve world-leading scale for integrated solar solutions, battery manufacturing and implementation. Reliance presented visuals of a new energy project in Gujarat, the western state. It claimed that the construction spans nearly 44 million square feet - four times the size of Tesla's Nevada gigafactory. Last year, Chairman Ambani said that in five to seven years the new energy segment will be as profitable as its mainstay oil-tochemicals business. Earnings growth is slowing down in the company's oil to chemicals business, which accounts for about 55% its total revenue. Emkay Global raised its valuation multiple on Sunday for Reliance’s new energy segment. It values it at 1,5 trillion rupees ($17 billion), or twice the invested capital. Jefferies stated that Reliance was well positioned to capitalize on the global energy transformation. The solar vertical is valued at $15 billion and the group as a whole at $295 billion. Jefferies warns that there are near-term headwinds to the Indian business. These include global overcapacity of solar panels and possible trade action by the United States. Reporting by Sethuraman N.R.; editing by Mrigank Dahniwala.
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Shanghai metals are rising after China pledges to boost industrial growth
Shanghai Futures Exchange's most traded metals contracts rose Monday, after China's Industry Ministry pledged to stabilize the machinery, automotive and electrical equipment sectors. Tao Qing said that China would launch action plans to stabilize growth in these industries. Tao said that the move was designed to "improve supply capacity for premium products" in order to prepare the industry to achieve an upgrade of quality and a reasonable growth, measured by quantity. It also promotes an "orderly withdrawal of outdated production capacities". SHFE zinc was the biggest gainer, up 2.8% at 22,925 yuan (US$3,194.85) per ton by 0705 GMT. The contract had hit 22,945 Yuan earlier, its highest level since April 3. SHFE nickel grew 1.91%, to 122.550 yuan. Copper rose 1.77%, to 79.700 yuan. Aluminium climbed 1.63%, to its highest level since March 27, at 20.840 yuan. Tin rose 1.27% to 267 250 yuan and lead gained 0.85% to 16,960. Metals analysts at a Beijing futures company say that the comments made by China's Industrial Ministry are encouraging. They also add that "all industrial sectors are very relevant for metals." The ministry stated that the plan would cover ten key industries in addition to downstream industries. These include steel, nonferrous materials, petrochemicals, and construction materials. Metals in general have responded positively, and those with the most room for growth will be stronger," said a Shanghai-based futures company metals analyst. The London Metal Exchange prices also rose, with the exception of lead. The most significant increase was in three-month zinc, which rose 0.94%, to $2,845 a ton. It touched $2,850 earlier in the session. This was the highest level since April 1. LME copper increased 0.85% to $9.862 per ton, after reaching $9.883 earlier. This is the highest level since July 8. Nickel rose by 0.74% at $15,330. Tin gained 0.64% at $33,660. Aluminium rose by 0.48% at $2,642, reaching its highest level since June 23. Lead fell 0.07% to $ 2,008.5. Click or to see the top news stories about metals, and other topics. ($1 = 7.1756 Chinese Yuan) (Reporting and editing by Sumana Niddy and Eileen Soreng; Reporting by Hongmei Li)
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Zambia's economy will grow by 6.4% in the next 12 months
The Finance Ministry said that the economic growth in Zambia will accelerate from 5.8% to 6.4% by next year. This is due to its mining and agricultural sectors. After years of prolonged debt restructuring negotiations, the economy of Southern Africa is now recovering from a severe drought in the region that curtailed growth last year. According to the medium-term budget plan of the Finance Ministry, gross domestic product is expected to rise by 6.5% in 2027, and 5.1% in 2020. The government announced that it would increase electricity production from solar power, due to the impact of the drought on hydropower and productivity. Budget plan states that production of copper for export is expected to reach just over one million metric tonnes next year. This will rise to 1.2 million in 2027, and then more than 1.3 millions in 2028. The government of President Hakainde Hichilema has been working to increase copper production and aims to reach close to one million tons in this year, after a strong first quarter. First Quantum Minerals completed a $1.25 Billion expansion project at the Kansanshi Copper Mine and Enterprise Nickel operations. Barrick Mining Corp. is also implementing a $2 billion project to double the output of its Lumwana Copper Mine and extend its lifespan to 2057.
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Futures for iron ore hit multi-month highs after mega-dam announcement
Iron ore futures rose to their highest level in almost five months on Sunday, thanks to the announcement that construction will begin on the largest hydropower project in the world and strong steel mill margins. After hitting a high of 819 Yuan on the intraday, which was the highest since Feb. 26, the most traded September iron ore contract at China's Dalian Commodity Exchange ended daytime trading 2.08% higher, at 809 Yuan ($112.74) per metric ton. As of 0705 GMT the benchmark August iron ore traded on the Singapore Exchange had risen by 2.81% to $103.6 per ton, reaching a high intraday of $104.8. This was its highest level since February 27. Li Qiang, Premier of China The start of construction of what will be the largest hydropower project in the world is expected to create a significant demand for construction grade steel, as part of the country’s push towards renewable energy. Atilla Winnel, Navigate Commodities' managing director in Singapore said: "The mega-dam announcement has a positive impact on the iron ore and rebar markets." Atilla said that there is no doubt that the construction of this dam will benefit local steel markets, and may attract construction grade steel from all over China, given that it's 3-4 times larger than Three Gorges Dam. Three Gorges Dam, currently the largest hydroelectric power plant in the world. China's benchmark lending rate remained unchanged in response to expectations following slightly better than expected second quarter economic data. Mysteel Global reported that the rising expectations of macroeconomic stimulus policies also pushed prices up for major steel products. Mysteel, in a separate report, said that improved margins on sales of steel prompted steel mills ramp up their blast furnace operations. The average capacity utilisation increased by 0.99 percentage point week-on-week between July 11-17. Coking coal and coke, which are used to make steel, grew by 7.88% each and 5.05% respectively. The benchmark steel prices on the Shanghai Futures Exchange have gained some ground. Rebar rose by 2.15%; wire rod was up by 2.48%; hot-rolled coils were up 2.2% and stainless steel gained 1.33%. $1 = 7.1756 Chinese yuan renminbi (Reporting and editing by Subhranshu Sahu, Janane Venkatraman).
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Portugal's Galp beats expectations by 1% with its core profit
Galp Energia, a Portuguese company, announced on Monday that its second-quarter adjusted core profit was better than expected with a 1% decline. This was due to higher oil production and more profitable trading of gas nearly offsetting falling crude prices and a narrowing refining margin. The company's consensus was for a drop in adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), which dropped to 840 millions euros (977.76 million dollars). Galp's main business is the extraction of crude oil from rich offshore Brazil fields. Its share of oil production and gas from its projects increased by 6% in the second quarter to 113,000 barrels a day. The company said that Brent oil prices dropped 20% in the second quarter to $67.9 per barrel, down from $85. Galp's adjusted net profit for the second quarter rose by 25% to 373 millions euros. This was also higher than the analysts' forecast of 220 million euro, thanks to lower taxes. ($1 = 0.8591 euro) (Reporting and editing by Inti landauro, Louise Heavens).
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Analysts say that India's investment trusts will expand their debt raising as yields fall.
Analysts said that the debt fundraising of India's asset backed investment trusts will continue to increase after surpassing $2 billion in 2025. This is because falling interest rates are continuing to fuel strong investor demands. Prime Database reports that the real estate investment trusts and infrastructure investment trusts raised more than 178 billion rupees (2.07 billion dollars) between January and June, compared to 56 billion rupees during the same period in 2013. Arka Mookerjee is a partner at JSA Advocates and Solicitors which offers legal advice to corporations. She says that bonds offer a lower capital cost compared to bank financing. The predictable income profiles of InvITs and REITs makes them well suited to debt funding, attracting institution investors who are looking for yield-bearing assets-backed instruments. The yields on corporate bonds have fallen over the past few months as the central banks have injected liquidity and cut interest rates by 100 basis point, but the banks have been slow to lower their lending rates. Embassy Office Parks REIT is among those firms who have taken advantage of the bond market. IndiGrid Infrastructure Trust (also known as Cube Highways Trust), Nexus Select Trust and Cube Highways Trust are also in the mix. Last week, it was reported that Embassy REIT plans to issue another bond. Other firms are also in the early stages of discussions. The bond market is less restrictive than the bank loan market, which allows REITs the flexibility to invest in multiple properties. Lata Pilai, India Senior Managing Director and Head of Capital Markets at JLL, an international real estate services company, explained. Trusts that must distribute at least 90% net distributable cash flow to unit holders say they can provide better returns with cheaper funding. These trusts can plan their finances more easily with the help of bond fundraising, and top credit ratings will attract investors like mutual funds and insurance companies. Krishnan Iyer is the chief executive officer of NDR InvIT. He said that AAA-rated structures offer greater credibility, better visibility, and better pricing. They also provide resilience to market volatility. Investors are increasingly attracted to the infrastructure and real estate sector, and REITs and invITs offer a combination of stability of income and growth over time, according to Suresh Darak. He is the founder of Bondbazaar.com, an online trading platform for bonds.
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Chinese exports of critical minerals plummet even as rare Earths recover
China's exports have plummeted in the last three months due to a crackdown against smuggling, transshipment and smuggling that involved China's most powerful spy agency. According to data released by the customs on Sunday, exports of germanium and antimony were respectively down 95% and 88% compared to January. China, like rare earths is the world's largest producer and refiner of both elements. In 2023 and 2024 respectively, both were added to an Export Control List. In December, exports to the U.S. became prohibited as a form of retaliation against chip restrictions. In April, rare earths were included in the same list of controlled substances. This led to a dramatic drop in export volumes which forced certain carmakers in Europe as well as the U.S.A. to stop some production lines. Last month, rare earth exports rose sharply thanks to an agreement between Washington and Beijing. However, germanium and antimony exports fell to their lowest levels ever. The fall in exports coincides with a well-publicised crackdown against critical mineral export controls evasion. China's spy agency reported last week that it had detected attempts by cargoes to bypass controls through transshipment. This is where they move from one country to another before reaching their final destination. The previous week, it was reported that a large amount of antimony appeared to have been transshipped by at least one Chinese firm from Thailand and Mexico to the United States. China's antimony exports to Thailand fell by 90% in the month of April, after reaching a record. Mexico has not received any antimony exports since April. Since China's export restrictions were implemented in July 2023, the spot market prices of high-purity Germanium have nearly doubled. Prices of antimony have almost quadrupled since May last year.
The yen is satisfied with the morning bid for Europe.
Wayne Cole gives us a look at what the future holds for European and global markets.
Investors have sold on rumours and bought (a little bit) on facts in Japan's upper-house election.
The Japanese markets were closed on Marine Day, so there was no liquidity. However, the yen has gained a little against the dollar and the euro. Nikkei Futures in Chicago have been trading in line with the Friday cash close. Wall Street futures have risen a little bit, while European futures are down a little.
Shigeru Shiba, the Prime Minister, seems to be in a safe position for the time being, even though the ruling coalition has lost control of upper house by just three seats. He will still need to get support from minor parties if he wants to pass any legislation.
The government may also choose to continue the difficult tariff negotiations with U.S. officials. Talks seem to be stuck, partly due to agricultural imports, which are culturally and politically sensitive for Japan. President Donald Trump’s August 1 deadline is fast approaching.
The European Union finds itself in a similar situation. The U.S. Commerce secretary Howard Lutnick is confident that a deal will be reached, but the EU is preparing a list for retaliation duties on U.S. goods.
On Thursday, the EU also tried to leverage China by having Ursula von der Leyen, President of the Commission and Antonio Costa as Council president meet with President Xi Jinping.
Reports suggest that Trump could meet Xi in October or in November. The U.S. has already allowed the export to China of chips in exchange for a resumption in rare earth shipments.
Analysts suspect that the U.S. effective tariff rate may be slightly higher than the 1930s levies which contributed to the Great Depression.
This optimism is largely based on the earnings of Alphabet, Tesla and other megacaps. Lockheed Martin's and General Dynamics' results should confirm that the increase in global defence expenditure is bringing in a windfall.
There's nothing in the diary for Monday, but you can always watch Trump.
Market developments on Monday that may have a significant impact
No speakers from the central bank or major data sources
(source: Reuters)