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ASIA GOLD - Price rise dampens activity in major hubs; India discounts reach 5-month high
This week, physical gold demand in major Asian markets has been subdued as high prices have curtailed purchasing activity. Discounts in India reached their highest level for five months. Indian dealers' discounts The discount was up to $43 an ounce, including 6% import duties and 3% sales taxes, compared to the previous week's up to $14. A jeweller in Chennai said that footfall has been down after Diwali and sales have also dropped sharply due to the high prices. On Friday, domestic gold prices per 10 grams were 126,900 rupees (1,443.77), an increase of 6.5% over the low of 119,150 rupees last week. Benchmark spot prices are on course for a weekly increase, up 5% in this week. The India Bullion and Jewellers Association has also asked the government for a fix to a loophole in the policy that allowed duty-free imports of platinum-alloy jewelry that contained approximately 90% gold. Harshad Ajmera, wholesaler JJ Gold House, in Kolkata, says that after extracting the gold from jewellery, some dealers sell it for a discounted price, which distorts trade because banks must pay a duty of 6% on imported gold. Bullion traded in top consumer China at a discount of up to $8 per ounce or a premium of $4 over the global benchmark price. . Bernard Sin, Regional Director of Greater China for MKS PAMP, said that the Asian gold market had entered a "pause mode" led by China. "Sentiment is cautious. With gold prices at record-highs and increased volatility, many traditional retailers are waiting for a more clear correction." In Singapore Gold in Hong Kong traded at a premium between $1.50 to $3.50 this week. Hong Kong Gold Premiums ranged between $0.50 to $2.50. In Japan, bullion The price was equal to or a $0.50 premium per ounce above spot prices.
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Gold poised to gain weekly gains on weaker dollar
The gold price rose on Friday, and was on track to rise for the week. This was supported by a falling dollar. Investors were waiting for additional U.S. data in order to assess whether a rate cut is likely for December after comments made by Federal Reserve officials that were hawkish. As of 0452 GMT, spot gold was up 0.7%, at $4,201.70 an ounce. Bullion has risen 5% this week. U.S. Gold Futures for December Delivery gained 0.3%, to $4.204.90 an ounce. Gold became more appealing to other currency holders as the dollar index fell for a second consecutive week. GoldSilver Central MD Brian Lan stated that "this week, gold did well. It's mostly because there was a slight weakening in the dollar as well as the speculative flow coming into the market expecting the Fed will lower interest rates." The gold price fell slightly because the Fed was not expected to reduce rates as aggressively due to the slowdown in the economy and the inflation fears. A growing number of Fed policymakers have expressed reluctance to ease further, citing concerns about inflation and signs that the labour market has remained relatively stable after two rate reductions this year. The Fed cut rates 25 basis points last month. However, Chair Jerome Powell has signaled caution about another rate reduction this year. This is partly due to the lack of data. According to CME Group’s FedWatch tool, traders are now pricing in a probability of 51% for a rate cut by a quarter point next month. This is down from 64% the previous session. Gold that does not yield tends to perform well when interest rates are low and economic uncertainty is present. After a 43-day record shutdown, which had caused investors to worry and disrupted economic data flow, the U.S. Government reopened. Silver spot rose by 1.3%, to $53 an ounce, and is on course for its best weekly performance since September 2024. It was up 9.7%. Palladium rose 1.4%, to $1,446.31, while platinum gained 1%, to $1596.10, on Friday. (Reporting and editing by Rashmi aich in Bengaluru, Subhranshu Sahu and Brijesh patel)
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Qatar increases January al-Shaheen Oil Term Price on Better India Demand
Four trade sources reported on Friday that QatarEnergy, a state-owned company, had increased the term premium charged for al-Shaheen oil loadings in January due to a rise in demand from Indian refiners looking for alternatives to Russian oil. The company set January's prices at 84c per barrel over Dubai quotes. This is up from 54c for December loading cargoes, and it was the lowest price in more than a decade due to the abundance of Middle Eastern oil. Three people confirmed that the price was determined after QatarEnergy, through its monthly tender process, awarded six al Shaheen cargoes Totsa, TotalEnergies' trading arm, HPCL-Mittal Energy Ltd, and Vitol. The company also sold a January-loading Qatar Marine cargo to Unipec (the trading arm of Chinese oil giant Sinopec) at a premium of around 5 cents over Dubai quotes. The sources also said that it sold a Qatar Land shipment to India's Reliance. According to spot crude oil tender records, Indian refiners did not participate in Qatar's tenders this year. They have looked for alternatives to Russian oil after the imports were severely curtailed last month in order to comply with Western sanctions on two of Russia's top producers.
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Details of the US-South Korea trade agreement released
The U.S. released some details on a new trade agreement with South Korea. The United States and South Korea released a joint factsheet on the recent summit between President Donald Trump of the U.S. and President Lee Jae Myung of South Korea. Washington and Seoul have agreed to lower the tariffs on U.S. autos and auto part imports from Korea to 15%. This is a reduction of 25%. Seoul said that the effective date for auto tariffs would be November 1, after the agreement was finalised, and when a bill relating to the $350 billion package of investment is presented to the Parliament. Tariffs on wood products, pharmaceuticals and aircraft parts imported from South Korea to the U.S. will not exceed 15%. Generic drugs and aircraft parts will not be subjected to tariffs. The U.S. is offering South Korea terms on semiconductors that are "no more favourable" than those that could be offered under a future agreement that covers a volume at least equal to South Korea's. The top policy advisor to the South Korean president said that this meant semiconductor tariffs were no less favorable than those of Taiwan, a key competitor. The two countries have agreed to collaborate on non-tariff obstacles in South Korea's digital and agricultural services sectors. This includes market access for U.S. beef, regulations of online platforms, and cross-border transfer of location data. Government-controlled Korea Gas also signed an agreement to buy about 3.3 million metric tons of U.S. liquefied natural gas a year in long-term agreements, the White House said earlier. INVESTMENT Both countries agreed that South Korea, as part of a $350 billion fund for investment, would pay 200 billion dollars in cash over a period of time. The payments would be limited to $20 billion per year. This was done in order to maintain stability. South Korea has said that it will work to minimize the impact on the domestic currency markets by sourcing the U.S. dollar through other means than the market. The fact sheet stated that South Korea may request an "adjustment to the amount and timing" of funding. In good faith, the United States would give consideration to this request. Seoul said that the remaining $150 billion will be allocated to shipbuilding, including loans and guarantees for ship financing from policy institutions, as well as investments by South Korean private companies. RAISING FUNDS South Korea said that the two parties agreed to share profits equally before initial investments were recouped. They added that they would only pursue projects with commercial viability. The country plans to use the operating income, which includes interest and dividends accrued from its foreign assets. The country is unlikely to need to sell bonds backed by the government on its local market, but will likely raise money from overseas markets. Reporting by Cynthia Kim and Joyce Lee; Editing by Ed Davies
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Oil rises 2% after Ukrainian attack damages Russian oil depot
The oil prices rose by about 2% Friday due to supply concerns after a Ukrainian drone attacked an oil depot at the Russian Black Sea port Novorossiysk. This is a major export center. Brent crude futures increased $1.24 or 1.97% to $64.25 a bar by 0315 GMT. U.S. West Texas Intermediate Crude rose $1.25 or 2.13% to $59.94 a bar. Russian officials reported that the attack occurred early Friday morning and damaged a ship docked in port as well as apartment buildings and a depot of oil in the Russian Black Sea Port of Novorossiysk. Three crew members were injured. The recent Ukrainian drone attacks in the port of Novorossiysk has sparked fears about oil supply disruptions. This port is the second-largest oil export hub for Russia, and it comes just two weeks after another major attack on Tuapse. The extent of damage is still unknown, but if this pattern of escalation persists then the supply of crude oil and products out of Russia will be curtailed. Brent and WTI both fell about 3% Wednesday. This was due to an OPEC-issued report that said global oil supplies will meet demand by 2026. This is a significant shift from the earlier OPEC projections which predicted a deficit in supply. This week, Brent gained 0.94% while WTI gained 0.28%. The U.S. Energy Information Administration reported on Thursday that crude oil stocks in the United States rose more than expected last week. However, gasoline and distillate stockpiles fell less than anticipated. The EIA reported that crude inventories increased by 6.4 millions barrels, to 427.6million barrels for the week ending November 7. A poll had predicted a rise of 1.96million barrels. Investors also watch the impact of Western sanctions against Russian oil and trade flows. As part of their efforts to get the Kremlin into peace talks on Ukraine, the U.S. has imposed sanctions against Russian oil companies Lukoil & Rosneft. The sanctions prevent transactions with Russian companies after November 21, JPMorgan reported on Thursday that the U.S. sanctions on Rosneft, Lukoil and other Russian oil companies have slowed down unloading. This has led to an increase in Russian oil stocks. After the November 21 deadline for receiving oil from sanctioned companies the bank said that unloading cargoes may become more difficult.
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Copper falls on China's weak data and US caution
After a four-session run of gains, copper prices fell on Friday as investors awaited delayed U.S. economic data in order to gauge the health and performance of the largest economy. By 0250 GMT, the most traded copper contract at Shanghai Futures Exchange had dropped by 0.30%, to 87.070 yuan (12,223.78) per metric ton. The benchmark copper for three months on the London Metal Exchange fell 0.45% to $10.906.5 per ton. Data from the National Bureau of Statistics revealed that China's industrial production grew by 4.9% on an annual basis in October, and retail sales grew 2.9%. Both were the lowest in over a year. New home prices dropped 0.5% monthly, the most since October 2024. According to data released by the People's Bank of China, new loans from Chinese banks dropped sharply from the previous month in October. This number was also below expectations, which indicates weak private demand in the face of a downturn in the property market. After the federal government reopened, the markets became cautious as they awaited the release of U.S. Economic data. The chances of an interest rate cut by the U.S. Federal Reserve in December have also diminished after a growing group of Fed policymakers expressed a reluctance to ease further. Aluminium, zinc, lead, and nickel all fell in price. Tin also lost 1.46 percent. Friday, November 14 DATA/EVENTS (GMT) 0430 Japan Tertiary Ind Act NSA Sep 0745 France CPI (EU Norm) Final MM, YY Oct 0745 France CPI MM, YY NSA Oct 1000 EU Total Trade Balance SA Sep 1000 EU GDP Flash Estimate QQ, yy Q3 1100 EU Reserve Assets Total Oct ($1 = 7.1230 Chinese yuan). Friday, November 14, DATA/EVENTS(GMT) 0430 Japan Secondary Ind Act NSA Sept 0745 France Final CPI (EU Norm), MM, YY NSA October 0745 France MM, YY NSA NSA Oct 1000 EU Trade Balance SA Sep 1,000 EU GDP Flash Estimate QQ and YY Q3 (1100 EU Reserve Assets Oct ($1 = 7.1230 Chinese yuan). (Reporting and editing by Dylan Duan, Lewis Jackson, Subhranshu
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China's October crude steel production falls on lower margins and weather-related restrictions
China's crude output of steel in October was down 2% compared to the previous month, and 12.1% compared to the year prior. This is due in part, weather restrictions in northern regions, declining margins, and falling exports. Data from the National Bureau of Statistics revealed on Friday that the world's largest producer of this product produced 72 million metric tonnes of crude steel in December, the lowest level recorded since December 2023. This was down from the 73.49 millions tons produced in September. Calculations based on data show that the average daily production in October was 2,32 million tons. This is down from 2,45 million tons in Septembre. In response to forecasts of worsening air pollution, several cities in northern China, including Tangshan (the key steelmaking hub), implemented production controls late October. Analysts also reported that the higher prices of raw materials pushed some mills to reduce their output in October. Iron ore rose 2% in October, while coking coal increased 13%. Steel reinforcing bars only grew 1%. Mysteel data showed that around 45% of steelmakers had made a profit at the end of October, compared to 56.7% late in September. Steel exports fell 6.6% in October from their peak of September, a result of dwindling demand. The total output for the year to date was 817.87 millions tons, a decline of 3.9%. China's output of steel will fall below 1 billion tonnes this year, for the first in six years. The state-backed steel industry association announced late last month that the country is on track to achieve the government's commitment to reduce production. Beijing announced a proposal in late October for a more strict steel capacity swap plan in order to reduce current capacity. This move is expected to rebalance the supply and demand of the sector, which is struggling with overcapacity.
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Oil prices rise by more than 2% following the Ukrainian attack on a Russian oil depot
The oil prices increased by more than 2% after an attack by a Ukrainian drone on a depot of crude oil in the Russian Black Sea Port of Novorossiysk. Brent crude futures increased $1.34 or 2.13% to $64.35 a bar by 0227 GMT. U.S. West Texas Intermediate Crude rose $1.40 or 2.39% to $60.09 a bar. According to a Telegram post by the operational headquarters for Krasnodar Region, drone fragments struck three apartments, an oil depot and coastal structures in a complex of trans-shipment. The benchmarks remained unchanged on Thursday, as fears of looming Russian sanctions countered worries about the global oversupply which had driven the contracts lower by more than $2 per barrel the previous session. As part of their efforts to get the Kremlin into peace talks on Ukraine, the U.S. has imposed sanctions against Russian oil companies Lukoil & Rosneft. The sanctions prevent transactions with Russian companies after November 21, JPMorgan reported on Thursday that the U.S. sanctions imposed against Rosneft, Lukoil and other Russian oil companies have slowed down tanker unloading. This has led to an increase of around 1.4 million barrels of oil per day, which is almost a quarter of Russia's potential seaborne exports. After the November 21 deadline for receiving oil from sanctioned companies the bank said that unloading cargoes may become more difficult. Brent and WTI Futures dropped more than $2 per barrel on Wednesday, after the Organization of the Petroleum Exporting Countries (OPEC) said that global oil supplies will slightly exceed demand by 2026. This is a change from the earlier projection of a deficit. Haitong Securities reported that after Wednesday's crash, the markets stabilized to reassess crude oil outlook. The U.S. Energy Information Administration reported on Thursday that crude oil stocks in the United States rose more than expected last week. However, gasoline and distillate stockpiles fell less than anticipated. The EIA reported that crude inventories increased by 6.4 millions barrels, to 427.6million barrels during the week ending November 7. This was compared to expectations from a poll of a rise of 1.96million barrels. (Reporting and editing by Tom Hogue; Sam Li, Lewis Jackson)
Morning bid Europe-Markets fall as Fed cuts hang in the balance
Gregor Stuart Hunter gives us a look at what the future holds for European and global markets.
The markets have had a traumatic 24 hours as traders reduced their expectations that the U.S. Federal Reserve would ease policy during its December meeting. A cut is now seen as a coin flip. All three fell: stocks, Treasury bonds, and the U.S. Dollar.
Data released on Friday revealed that China's retail sales and factory output grew at the slowest pace for over a decade in October.
Fed officials' comments have increased the likelihood of a "hold" at the central bank’s final meeting for the year. Alberto Musalem of the St. Louis Fed said that there was little room for further easing without becoming too accommodative. Beth Hammack, Cleveland Fed president, said the rate policy needed to remain restrictive to keep inflation under control.
Neel Kazhkari, the Minneapolis Fed president, told Bloomberg that while he was against a rate reduction last month, he is still on the fence regarding December.
FedWatch, a tool of the CME Group, shows that Fed funds futures now price an implied probability of 50.7% for a quarter point cut at the next central bank meeting on December 10. This is down from 63% on Thursday.
The yield of the benchmark 10-year Treasury Note rose to 4,1211%, up from its U.S. closing of 4.111%, on Thursday. Meanwhile, the yield of the two-year Treasury Bill, which increases with the expectation of a higher Fed Funds rate, increased to 3,593%, as compared to a U.S. closing of 3.589%.
The dollar index fell 0.1%, to 99.13. This is near its lowest level of the month.
After Wall Street stocks ended a four-day streak of gains on Thursday, the MSCI broadest Asia-Pacific share index excluding Japan fell 1.5% on Friday.
The dip-buying that took place during Asian trading hours has waned by the afternoon. S&P 500 futures have pared gains and last traded down 0.1%.
Euro Stoxx futures fell 0.4% in early European trading. German DAX was up 0.1%, and FTSE Futures dropped 0.5%. The last time the sterling fell was by 0.4% to $1.3145. According to the Financial Times, which cited officials who were briefed about the decision, the British Prime Minister Keir Reeves and the Chancellor of Exchequer Rachel Reeves had abandoned plans for raising income tax rates. This change of course came just weeks before November 26th, when the government will release its budget. Brent crude prices increased after a Ukrainian drone attacked a Russian oil depot. Brent crude prices jumped 1.5% to $63.96.
The following are key developments that may influence the markets on Friday.
Earnings:
Allianz, Swiss Re and Rolls-Royce Holdings
Economic Data
France: CPI for the month of October
Eurozone: employment flash estimate for Q3, trade balance in September, GDP Flash estimate for Q3
Debt auctions:
U.K.: 1 month, 3 months and 6 months government debt
(source: Reuters)