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Investors reduce rate-cut betting as gold prices rise on stronger dollar
Gold prices held steady Monday as the dollar strengthened. Investors were reducing their bets on further Federal Reserve rate reductions following Jerome Powell's recent hawkish comments. Meanwhile, demand for gold was also dampened by the easing of U.S. China trade tensions. As of 0250 GMT, spot gold fell 0.1% to $3.997.94 an ounce. U.S. Gold Futures for December Delivery rose 0.3% to $4.008.60 an ounce. The gold price has fallen about 10% since the record high of $4381.21 set on October 20, while the dollar is climbing to a three-month high. Kelvin Wong, senior market analyst at OANDA, said: "There is a lack in upside momentum for gold due to technical factors. The dollar also remains fairly resilient. This has a negative effect on gold." On October 29, the Fed cut interest rates for the second consecutive time by 25 basis points. CME's FedWatch Tool shows that traders now expect the Fed to cut rates in December by 71%, down from 90% before Powell made his remarks. Gold that does not yield is a good investment in low interest rate environments and economic uncertainty. Investors are watching other economic indicators, such as the ADP employment data or ISM PMIs, this week to see if they can change the Fed's hawkish position. Wong said that the safe-haven effect has diminished at this time due to the de-escalation in U.S. China trade tensions. It could also be a rotation to a play with much more risk in the equity market." Last week, U.S. president Donald Trump announced that he and Chinese President Xi Jinping had 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. Silver spot rose 0.3% per ounce to $48,77, platinum was up 1% at $1,583,28, and palladium climbed 0.4% to $1439.21. (Reporting by Ishaan Arora in Bengaluru; Editing by Subhranshu Sahu)
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Shanghai copper continues to lose money on the back of weak China factory data
Shanghai copper continued to suffer losses from last week, as weak Chinese manufacturing data dampened sentiment. As of 0315 GMT, the most active copper contract traded on the Shanghai Futures Exchange fell 0.41%, to 86850 yuan (12,192.90 dollars) per metric tonne. Benchmark copper for the three months ended at $10,853.5 per ton. The copper price fell as 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 trying to get ahead of potential U.S. Tariffs, the reading fell below expectations. 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 cutting 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 per ton one month earlier. Aluminium gained 0.78% among other SHFE base materials, while zinc rose 0.34% and tin grew 0.56%. Lead and nickel showed little change. Monday, November 3 DATA/EVENTS (GMT) 0850 France HCOB Manufacturing PMI Oct 0855 Germany HCOB Mfg PMI Oct 0900 EU HCOB Mfg Final pmi October 0930 UK S&P GLOBAL MANUFACTURING PMI Oct 1445 US S&P Global Manufacturing final pmi Oct 1500 US ISM Manufacturing oct. ($1 = 7.1230 Chinese yuan). Monday, November 3, DATA/EVENTS(GMT) 0850 France HCOB Manufacturing Mfg Oct 0855 Germany HCOB Manufacturing Mfg Oct 0900 EU HCOB Manufacturing Final PMI October 0930 UK S&P Global Manufacturing PMI final Oct 1445 US S&P Global Manufacturing PMI final Oct 1500 US ISM Manufacturing Oct ($1 = 7.1230 Chinese yuan). (Reporting and editing by Dylan Duan & Lewis Jackson.
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China's iron ore prices fall due to declining steel production and rising inventories
Iron ore prices weakened on Monday due to a decline in steel production in China and rising port inventories. There was also concern about a weakening of downstream demand. By 0240 GMT, the most traded January iron ore contract at China's Dalian Commodity Exchange fell by 0.75% to $791 yuan (US$111.05) per metric ton. The benchmark December Iron Ore at the Singapore Exchange fell 0.56% to $105.55 per ton. According to Mysteel, the capacity utilisation rate at Chinese blast-furnace steel producers fell by 1.3 percentage point to 88.6% on average, for the fifth consecutive week between October 24-30. Mysteel's data shows that the daily hot metal production, which is a measure of iron ore consumption, fell 1.5% from one week to another, reaching 2.36 million tonnes. Everbright Futures, a Chinese broker, predicted that overseas supply would continue to improve in November. Shipments and arrivals are expected to increase. Analysts from Galaxy Futures stated that while domestic steel production may improve in the fourth quarter of this year, the main issue is the rapidly declining end-user demand for iron ore. As part of China's government pledge to reduce the overcapacity, China's steel association, which is backed by the state, announced that its steel production would drop below 1 billion tonnes in 2025. SteelHome data shows that the total iron ore stocks across Chinese ports increased by 1.53% in a week to 135.6 million tonnes as of October 31. Coking coal and coke, which are both steelmaking ingredients, have lost ground. They fell by 0.5% and 1.06 %, respectively. The benchmarks for steel on the Shanghai Futures Exchange fell. Rebar fell 0.8%, while hot-rolled coils dropped 0.63%. Wire rod slipped 0.24%, and stainless steel declined 0.59%. ($1 = 7.1230 Chinese yuan) (Reporting by Lucas Liew; Editing by Subhranshu Sahu)
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Sources say that India's BPCL will buy Upper Zakum crude in December to replace Russian oil.
Two trade sources reported on Monday that India's Bharat Oil Corp bought crude oil in Abu Dhabi as part of a spot-tender to replace oil imported from Russia, after the U.S. imposed sanctions against two major Russian producers. They said that the Indian refiner bought 2 million barrels Upper Zakum crude to be loaded in December. ADNOC Trading is said to be the supplier of the cargo, according to a source. Washington imposed sanctions last week on Rosneft, and Lukoil - the two largest Russian oil companies - in an effort to increase pressure on President Vladimir Putin for ending the war in Ukraine. Last week, a BPCL spokesperson said that the company will only buy Russian oil from entities not sanctioned. BPCL purchases 2 million metric tonnes (14,66 million barrels), mainly Russian oil, from the spot markets every month. The source stated that BPCL hopes to continue buying Russian oil through non-sanctioned sources for half of the supply.
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Malaysia PM says $142 Million magnet plant will boost rare earth industry, reports state media
State media reported that Malaysian Prime Minister Anwar Ibrahim stated that the development of a 600-million-ringgit ($142-million) super magnet production facility in Pahang would strengthen the nation's rarity earth sector. In July, Australia’s Lynas Rare Earths signed a contract with South Korea’s JS Link to build a 3,000-tonne neodymium magnetic manufacturing facility near Lynas’ advanced materials plant located in Malaysia’s Kuantan District. Anwar told state news agency Bernama that Malaysia's Trade Minister would monitor the project, as it involves rare earth processing. Anwar stated that "JS Link already bought the land and is ready to start operations. This is no longer a Memorandum of Understanding." The investment has been made, and the land is prepared, so it's about speeding up the process. Anwar stated that the collaboration would help Malaysia to become a leader in advanced materials and clean technologies, as well as support efforts to create a supply chain of critical minerals. According to government estimates Malaysia has 16.1 million tons of rare earths deposits but lacks the technology required to mine and process these. The country seeks foreign investment to mine and process rare earths. Rare earths play a vital role in the production of high-tech products, such as electric vehicles, semiconductors, and missiles. Malaysian officials are reportedly in discussions with China about rare-earth processing. Last month, they signed an agreement with the United States to seek cooperation for diversifying their critical mineral supply chains.
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Investors demand creation of International Minerals Agency
On Monday, a group of mining investors called for the creation of a new independent agency to oversee the sector. This would be modeled after the International Energy Agency. A statement from the group of investors said that they manage or advise assets worth $18 trillion. The new International Minerals Agency will be able monitor global mineral demand and supply as well as illegal flow. It added that the agency would also provide information about how companies are progressing towards global performance standards in sustainability. The Global Investor Commission on Mining 2030 includes PIMCO as well as ING, L&G and Allianz Investment Management. Church of England Pension Fund, Royal London Asset Management and Allianz Investment Management are also members. After meeting with the President of Brazil, Luiz inacio Lula da S Silva, it released a report aimed at providing a 10-year roadmap for a responsible mine sector. This was ahead of United Nations Climate Negotiations. Peter Kindt is the global head of transition accelerators at ING. This will require collaboration between multiple stakeholders and new initiatives, such as an International Minerals Agency. Reporting by Eric Onstad, London Editing by Matthew Lewis
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CATL sources lithium ore from outside suppliers as flagship mine remains closed
Sources say that China's CATL placed orders for lithium ore with external suppliers in November as the battery giant is seeking alternative feedstock since its flagship Jianxiawo Mine has closed. Two sources who have direct knowledge of the matter and requested anonymity because they are not authorised to talk publicly, said that a CATL joint venture in Yichun near the mine placed the orders earlier this month with traders. One source said that the two companies rarely did this when the mine was at full capacity. CATL has not responded to our request for comment. CATL has suspended mining at its Jianxiawo lithium site in Yichun, Jiangxi Province, since early August, after the expiration of its mining licence. CATL announced in August that it would apply to renew the mining license as quickly as possible. The Chinese newspaper Securities Times announced a month later that the mine would reopen in a few weeks. CATL, however, has not yet announced such a move. According to Australian government data, the Jianxiawo Mine has a production capacity of 46,000 metric tonnes of lithium carbonate per year, which is 3% of global output in 2025. The mine was closed in the last year. It reopened in February, before closing again in August. The mine is a major source of lithium for the global market, so prices have been affected each time. Mark Potter, Shanghai Reporting Editor
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Draft shows that the EU is considering lowering its 2040 climate target due to forest CO2 absorption.
A draft EU compromise proposal revealed that the European Union was considering a clause to slow down its climate targets for 2040 if the forests of the countries were not able to absorb enough CO2 to reach the target. The EU is trying to get their new climate target approved at a meeting of their climate minsters on November 4, just in time for Ursula von der Leyen, the President of the European Commission to not go empty-handed with other world leaders to the U.N. COP30 Climate Summit on November 6, The EU is looking at various options and flexibilities to reduce the climate goal, which, according to the Commission, should be a 90% reduction in global warming emissions by 2040. The latest draft of the negotiating agreement, which was seen on Sunday by, included a clause that stated that if forest and other land-based activity that absorbs CO2 emissions fail to meet the EU's target, it will be permitted to propose an "adjustment of the intermediate 2040 target that corresponds to and is within the limits" of any possible shortfalls. It said that Brussels could respond by suggesting additional measures to get the forest sector on track with the emission goal. This move is similar to a proposal by France made last week. As reported previously, France had called for an "emergency break" that would reduce the 90% target of emissions by 3% if the forests and land-use sectors fail to deliver. In the past decade, Europe's forest and land use sector has absorbed less CO2, mainly due to wildfires and inefficient forest management. In previous drafts of negotiations, it was revealed that countries had already considered allowing the EU to revise its 2040 target every two years. This could have weakened the goal in the future. On Tuesday, their ministers must still resolve key issues. This includes the percentage of the 90 percent reduction in emissions that countries can cover by purchasing foreign carbon credits. To achieve the target, at least 15 out of 27 EU member states must support it. A spokesperson from Denmark, the rotating EU presidency, and the author of the document, stated that all the ingredients are in place for a successful deal. The spokesperson stated that the COP30 is about to begin and now was the right time to set the target of 2040.
China stocks jump on Politburo policy shift; Aussie falls after RBA
China stocks surged and commodities found support on Tuesday on Beijing's new promises of rate cuts and a boost to usage, while the Australian dollar moved and worldwide stocks were wobbly ahead of an important U.S. inflation reading.
Australia's reserve bank left its money rate the same at 4.35% as anticipated, though the Aussie fell sharply in the consequences as policymakers toned down their hawkish language.
Overnight, the S&P 500 fell 0.6% and futures dipped 0.04% in the Asian afternoon.
A 2.5% drop for chip titan Nvidia, which edged a. portion lower still in after-hours trade following China. opening an antitrust investigation, weighed on the mood.
MSCI's broadest index of Asia-Pacific shares outside Japan. increased a touch, helped by a 0.8% gain for the Hang. Seng index and a 1.4% rise in the blue chip CSI300. index.
Japan's Nikkei rose 0.5%.
A declaration from China's Politburo on Monday had currently. spurred a late surge in Hong Kong stocks and sent yields on. Chinese government bonds to record lows on bets there is assistance at. hand to lift sluggish costs and economic development.
State media outlet Xinhua reported the top Communist Celebration. officials had shifted the financial policy position from prudent. to reasonably loose, matching their response in previous. crises, and would stabilise markets and strongly increase. usage.
The declaration signals possible rate cuts, financial growth. and asset buying ahead, said analysts at ANZ in a note, however. with the magnitude uncertain and more information perhaps coming. later in the week from the Central Economic Work Conference.
The rally raised China's significant indexes to one-month highs. with customer shares notching large gains. The optimism likewise. eclipsed depressing China trade numbers, which revealed exports. grew at a slower rate in November while imports all of a sudden. shrank.
But the runaway rally in Chinese bonds, which extended on. Tuesday to drive 10-year and 30-year yields. to record lows suggests some financiers doubt the. pledges are going to lift long-run growth in China.
In the past need for credit outstripped supply, making it. uncomplicated for the PBOC to improve credit development by cutting. policy rates, stated Julian Evans-Pritchard, head of China. economics at Capital Economics.
By contrast, there is now minimal cravings among homes. and big parts of the private sector to take on more financial obligation, even. at lower rates. That leaves the majority of the burden of stimulating. the economy on fiscal policy.
WAITING ON CPI
Australian ore miners caught a boost from China's policy. shift, with Fortescue up practically 7% and Rio Tinto. increasing more than 5%.
The Aussie last traded 0.76% lower at $0.6392. The. Reserve Bank of Australia stated in its policy statement on. Tuesday that the board had actually gotten some confidence that. inflation was heading back to target.
RBA Governor Michele Bullock, speaking after the policy. conference, left the door available to a cut in rates of interest as early. as February.
The U.S. customer cost report is out Wednesday and the core. is seen holding at 3.3% for November, which ought to be no. obstacle to a reducing. Rates of interest futures indicate an 85%. opportunity of a rate cut next week is priced in by the market.
Traders are likewise anticipating rate cuts in Europe and Canada. later today and are leaning towards a 50 basis point cut in. Switzerland as authorities might like to tap the brakes on the. franc's relentless increase versus the euro.
The euro traded at $1.0556 and 0.9264 francs. The. Japanese yen, which was the best-performing G10. currency in November as expectations have grown for a December. rate hike in Japan, was bit altered at 151.23 per dollar.
Positioning information reveals speculators turned to a long yen. position recently for the first time in more than. a month.
Oil rates increased on Monday on the news of China's policy. strategies and as the sudden fall of Syrian President Bashar al-Assad. highlighted instability in the Middle East and geopolitical. risk. But Brent unrefined futures fell 0.53% to $71.76 a. barrel on Tuesday.
Gold hovered at $2,669.23 an ounce while bitcoin. brought $96,750.
(source: Reuters)