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Investors await US private payroll data to see if gold prices will rise.
The dollar hovered around a three-month peak on Monday, and traders were waiting for the U.S. payroll data to get a better idea of the Federal Reserve's outlook on monetary policy. By 1129 GMT, spot gold had not changed much from $4,006.02 per ounce. U.S. Gold Futures for December Delivery rose by 0.5% to $4017.40. Dollar index was near its highest level in three months, making gold expensive for those who paid with other currencies. "We're still in consolidation mode." It's a little more difficult because there are no U.S. data, but weaker U.S. data will support rate cuts by the Fed and should allow gold to reach $4,200 an ounce before the end of this year," said UBS Analyst Giovanni Staunovo. According to CME's FedWatch tool, traders are pricing in a 70 percent chance that the Fed will cut rates in December. Gold that does not yield is more popular when interest rates are low or in economic times of uncertainty. Investors are watching the ADP U.S. Employment Data and ISM PMIs for this week to see if they can change the Fed's hawkish position. China has ended its long-standing policy of tax exemption for certain gold retailers, which could set back the buying spree in the world's largest consumer market. UBS expects the new rule to have only a marginal effect on gold prices globally, citing central bank purchases and strong investment. Analysts at Heraeus wrote in a report that gold prices may continue to fall if the resistance level between $4,000 and $4050 is maintained. The price of gold would have to rise above $4,155/oz for an initial indication to indicate a return to the rally," they said. Last week, U.S. president Donald Trump agreed to reduce tariffs against China in exchange of concessions from Beijing on the illicit fentanyl market, U.S. soya bean purchases and rare earths imports. The price of spot silver increased by 0.2%, to $48,72 per ounce. Platinum rose 1.9%, to $1597.34, and palladium grew 1%, to $1448.32. (Reporting from Brijesh Patel and Anmol Chaubey in Bengaluru, Editing by David Goodman & Shailesh Kumar)
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German Minister: Power price support for Industry to be Introduced in January
The German economy minister announced on Monday that the government will introduce a program to reduce electricity prices for manufacturers at the start of next year, while finalising talks with EU competition authorities. "We are nearing the end of our negotiations with the European Commission." "I expect that the industrial electricity rate will be introduced on January 1, 2026," Katherina Reiche, Minister of Economy and Energy in Berlin told journalists. The newspaper Handelsblatt reported on Monday that an alliance of think-tanks led by the advisory body DENA estimated the scheme would cost the German government 4.5 billion euro ($5.25 billion) in three years based on the target industrial electricity price at 5 eurocents per kilowatt-hour. Reiche said the EU was also in favour of a separate program to provide financial assistance for sectors heavily dependent on buying green house gas emission rights. Reiche stated that the EU Commission is sending "positive signs" in support of extending the program, called electricity price compensation far beyond 2030.
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Shanghai copper reverses loss despite weak China factory data
Shanghai copper reversed early losses by the close of Monday's trade, despite weak Chinese factory data that weighed on sentiment. The Shanghai Futures Exchange's most active copper contract closed the daytime trading at 87300 yuan for metric tons, a 0.10% increase. Shanghai copper fell as much as 0.56 percent earlier in the day. However, dip-buying helped the red metal return to a modest increase, traders reported. As of 0920 GMT, the benchmark three-month price for copper had risen by 0.09%. It was now $10,897 per ton. The data released on Monday and the end of last year showed that factory activity in China, the world's largest metal consumer, remained low. The RatingDog PMI (Purchasing Managers' Index) compiled by S&P Global fell to 50.6 in the month of October, according to a survey conducted on Monday. This was below the polled expectation of 50.9. The official survey, published on Friday, showed that China's factory activities shrank for the seventh consecutive month in October. The official manufacturing PMI fell to 49.0, from 49.8 in Septembre. After months of frontloading in order to avoid possible U.S. Tariffs, the reading fell below expectations and was at a six-month-low. The stronger U.S. Dollar also affected the market. This made commodities that are traded in the greenback costlier for investors who use other currencies. Last week, the U.S. Federal Reserve expressed reservations about reducing interest rates. This raised questions about whether a second cut in December is likely. The Yangshan premium on copper continued to be a factor in the decline of China's copper demand despite high prices. The price of copper, which is a reflection of the demand for it imported into China, was $36 per ton last Friday. This has dropped from $50 a tonne a month earlier. Aluminium gained 1.48% among other SHFE base materials. Zinc was up by 0.96%. Lead was also up by 0.11%. Nickel was up by 0.26%. Tin rose 0.71%. (Reporting by Dylan Duan and Lewis Jackson; Editing by Eileng Soreng and Ronojoy Mazumdar) (Reporting and editing by Eileen Soreng, Ronojoy Mazumdar and Dylan Duan)
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Gold prices rise on US interest rates expectations
Gold prices rose Monday on expectations of more U.S. rate cuts following comments by Christopher Waller from the U.S. Federal Reserve Board. However, a stronger dollar, and easing trade tensions held gains back. By 0905 GMT, spot gold had risen 0.5% to $4,020.45 per ounce. U.S. Gold Futures for December Delivery rose by 0.9% to $4031.50. "We're still in consolidation mode." It's a little more difficult because there are no U.S. data, but weaker U.S. data will support rate cuts by the Fed and should allow gold to reach $4,200 an ounce before the end of this year, said UBS analyst Giovanni Staunovo. Fed's Waller, who cited the weakening labour market, said that the Fed should reduce the interest rate policy again in December. According to CME's FedWatch tool, traders are pricing in a 70 percent chance that the Fed will cut rates in December. Gold that does not yield is more popular when interest rates are low or in economic times of uncertainty. Investors are watching other news this week including ADP U.S. Employment Data and ISM PMIs for indicators that may alter the Fed's aggressive stance. The safe-haven strategy has decreased at this time due to the de-escalation in U.S. China trade tensions. This could be a move towards a more aggressive play on equities, said OANDA analyst Kelvin Woong. Last week, U.S. president Donald Trump agreed to reduce tariffs against China in exchange of concessions from Beijing on the illicit fentanyl market, U.S. soya bean purchases and rare earths imports. The dollar index was near its highest level in three months, which made gold more expensive to buyers of other currencies. Other metals rose as well. Spot silver increased 0.5% to $49.90 per ounce. Platinum climbed 2.2%, to $1.601.91, and palladium jumped 1.3%, to $1.452.58.
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Letter shows that activist Palliser is putting pressure on Rio Tinto in order to bid for Teck.
A letter seen by the Board shows that the activist fund Palliser capital has increased pressure on Rio Tinto, asking it to launch a "now-or-never" counterbid to acquire Teck Resources. The letter urges Rio Tinto's dual listed structure to be unified and to spin off the base metals division to create a powerhouse in copper. In a letter dated October 17, Rio shareholders Palliser and Palliser encouraged the company to contest Teck's merger agreement with Anglo American in order to gain control over a copper portfolio of tier one that could produce combined 1.3 million tons of copper a year. Palliser, which according to sources in the know, holds a stake of $400 million, or less that 1%, in the miner confirmed the authenticity but declined to comment. The letter stated that the deal would diversify Rio's business beyond iron ore and unlock cost synergies of at least $800,000,000. It also said it would accelerate the copper growth for a decade, at a lower cost and risk than if the miner had expanded greenfield, thus better positioning Rio to take part in the global transition towards clean energy. In response to the letter Rio Tinto said it was focused on "maximising value for shareholders" and would provide an update on the strategy at its Capital Markets Day five weeks later. Shareholders had rejected the arguments Palliser made in support of its dual listing. A LETTER STATES THAT ENDING THE DUAL LISTING IS NECESSARY TO MERGE Palliser’s plan to counterbid Teck would see Rio, which is currently listed in both London and Sydney, unify and become a holding company in Australia. It would then split into two companies: one focusing on copper, aluminum and zinc in Canada and the other concentrating on iron ore. The shareholder, who has been campaigning for more than a year for Rio to be unified, stated in the letter that the dual-listed company structure makes an offer based on stock for Teck "structurally impossible", forcing the miner to expensive or dilutive alternative. The letter stated that "unification is not an option - it's a requirement for any credible strategic alliance", and urged the board to move quickly before the AngloTeck tie-up was finalised. A LETTER ALSO URGENT DEMERGER The company said that a split into two separate entities would release trapped value and attract investors looking for pure-play copper stocks. It said that Rio Tinto could make a more attractive offer with a premium up front, and also allow Teck shareholders to take part in Rio Tinto’s potential re-rating, as FutureMetalsCo will be demerged. Anglo and Teck have agreed to merge, without offering a premium for shareholders who will vote the deal on 9 December. Sources close to the issue said Palliser holds a small shareholding in Canadian miner. The fund didn't respond to an inquiry for comment about that holding. Rio's 2025 Annual General Meeting saw shareholders vote overwhelmingly against Palliser’s proposal to review the dual listed structure. They sided with the board. Palliser's suggestion that a unified list would provide greater flexibility in large M&A deals was not taken into consideration by the miner's boards at the time. Rio Tinto said Monday that it "strongly rejects" all the unfounded claims made by Palliser about the quality of the analysis presented to shareholders. Clara Denina, Jan Harvey (Editing and Reporting)
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After a year, the leader of Spain's Valencia Region resigns due to deadly floods
Carlos Mazon, leader of Spain's eastern Valencia Region, announced on Monday that he would be stepping down due to the way his administration handled the catastrophic floods which swept through the region one year ago. Mazon is under constant pressure to resign, especially from the relatives of victims, ever since the torrential rains on October 29, 2024, which killed 229 and caused billions in damages in Valencia, Spain's 3rd largest city. Mazon said to reporters that he "can't continue anymore" after an intensely critical speech where he criticized the response of the national government to the crisis. He didn't say whether he would call a snap vote, or if he would also resign from his regional assembly seat - ending his parliamentary immunity. Nor did he specify who his interim replacement will be. Residents in the affected area accuse the regional authorities of having issued an alert too late, after many buildings had already been submerged and people drowned in the worst floods in Europe since 1967. Mazon resigned on the day Maribel Vilaplana - a journalist in the area with whom he had lunch the day before the floods - was scheduled to testify at a hearing investigating the criminal liability of authorities for the deaths.
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China reduces gold tax exemptions for certain retailers, which could curb purchasing
China has ended its long-standing policy of tax exemption for certain gold retailers, which could set back the buying spree in the world's largest consumer market. Beijing will reduce the value-added taxes on gold sold by retailers to consumers, which was purchased at the Shanghai Gold Exchange and Shanghai Futures Exchange. The exemptions will be reduced to 6% as of November 1. This is according to the new policies published on Saturday by the Ministry of Finance. The lower exemption will be valid until December 31, 2027. Joni Teves is a strategist with UBS in Singapore. She wrote a note Monday stating that she expects gold prices to rise due to the increased tax being passed onto consumers. According to the new rules, VAT exemptions on standard gold traded on exchanges remain in place. The new tax regime comes amid a rush of gold purchases around the world, particularly in China. Consumers have lined up at retailers to purchase jewellery. Gold's price rose to a record of $4,381 per ounce on 20 October as a result of the buying. On Monday, spot gold prices briefly fell below $4,000 per ounce. They were last trading at that level. Prices have fallen about 9% from the record high. On Monday, shares of gold jewellery retailers Laopu Gold, Chow Tai Fook, and Zijin Mining all fell by as much as 9% or 12%. Gold miners Zhongjin Gold and Zijin Mining each dropped by as little as 2%. The value-added exemption on platinum for China Platinum Company was also removed last month. This also began on November 1. Reporting by Dylan Duan; Li Gu and Lewis Jackson, Editing by Christian Schmollinger
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Ten-year high in resource disputes between states and investors
DLA Piper, a law firm, said that disagreements between governments and investors about resources have reached a ten-year high. This is due to resource nationalism, and the growing competition between China and the U.S. for vital minerals. The scramble to find minerals is reflected in the race to get the precious oil and gas revenue that is vital to state coffers. This is especially true for emerging economies. DLA Piper reported that the 32 disputes filed with the World Bank's arbitration body so far this year, which include everything from gold, uranium, and lithium to oil and gas, have already exceeded those of last year. As their value became more evident, states felt the need for greater control over any deposits within their borders of critical minerals, said Gabriela Alvarez Avila, DLA Piper's partner and coleader of international arbitrage. DLA Piper's database analysis of the International Centre for Settlement of Investment Disputes revealed that 17 of the cases involved oil and gas assets. Colombia is the country with the most disputes (11 in total), and has four. Last year, Colombian President Gustavo Petro designated several mining zones as temporary natural reserve, banned fracking, and threatened to stop coal exports to Israel. This caused tension with investors. Mexico, which will nationalise lithium in 2022 and Ecuador, Panama, and Mexico all had two cases. DLA Piper didn't break down the specific disputes. Africa has ten disputes involving Niger, Tanzania the Democratic Republic of Congo Mali Morocco Senegal. Many countries and investors are interested in the DRC because it is home to critical minerals such as cobalt and copper. The United States in particular has said it is open to exploring critical minerals partnerships in the DRC after a Congolese senator contacted U.S. officials to pitch a minerals-for-security deal. AVZ Minerals, based in Australia, said that a new agreement between Kinshasa (the country) and KoBold Metals (a U.S. company), to develop a part of a Lithium project, violated a ruling by an international arbitral tribunal. DLA Piper's study found that the majority of disputes remained in Europe and Central Asia.
MORNING BID EUROPE - Private jobs on the spotlight amid data blackout
Ankur Banerjee gives us a look at what the future holds for European and global markets
The markets are still recovering after a week of action packed events that have left the risk momentum intact. This week, the focus has shifted on a few private economic data that could shed light on the state of the U.S. labor market.
The U.S. government shutdown is expected to continue, and there will no longer be any economic data from the government.
So, no nonfarm payrolls, no JOLTS job openings. Investors will instead analyze private employment data provided by ADP in order to gauge the direction U.S. monetary policies. ADP's data will be released later this week.
Investors are searching for answers due to a divided Federal Reserve. Fed Chair Jerome Powell shocked markets last week by expressing a hawkish attitude, suggesting that the recent rate reduction could be the final one of the year.
Christopher Waller, the influential Fed governor, made a case for further policy easing on Friday to support a weakening labor market. CME FedWatch showed that traders are now pricing in only a 69% probability of a December rate cut, down from 90% one week ago.
As Chinese stocks continue to fall, the afterglow from the much-anticipated trade truce has waned. This is the classic case of buying the rumour and selling the truth.
Data released on Monday showed that China's factory output and new orders both declined amid the tariff fears. Meanwhile, big manufacturing hubs in other parts of the world also struggled to get going in October.
Later in the session, markets will also be looking at similar reports from Europe. European futures indicate a higher opening, while the euro is hovering at a 3-month low.
Powell's hawkish tones have helped boost the dollar, although analysts do not expect it to remain strong for very long. They suggest that data will soon reveal cracks in the largest economy of the world.
Market developments on Monday that may have a significant impact
Manufacturing data for October
(source: Reuters)