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Gold gains on dollar weakness, US jobs data awaited
Gold rose on Monday, as the dollar remained near its lowest point in over three years. Meanwhile, the focus of the market shifted to the upcoming U.S. employment data that could influence the Federal Reserve’s rate-cut trajectory. Gold spot rose 0.7% at $815 GMT after falling to its lowest level since May 29. Bullion prices have risen by 5.4% this quarter. U.S. Gold Futures rose 0.6% to $3,305.50. The U.S. Dollar index is hovering near its lowest point since March 2022. The greenback price of bullion is less expensive to other currency holders when the dollar weakens. I see two interrelated factors that support gold. "A weaker U.S. Dollar and President (Donald Trump)'s continued pressure on the U.S. Federal Reserve, to reduce interest rates," Giovanni Staunovo said. Trump said that he wouldn't appoint someone to lead the Federal Reserve if they didn't support lower interest rates. Investors were waiting for the U.S. employment data, due Wednesday, as well as the non-farm payrolls, due Thursday. These reports could give insight into the Fed’s future interest rate cut plans. Staunovo said, "The focus will remain if data indicate a further decline in economic activity that would allow the U.S. Central Bank to lower interest rates." Investors expect a 65 basis point Fed rate cut by the end this year. In a low interest rate environment, gold tends to be more appealing as it has no yield. Canada has scrapped the digital services tax that targeted U.S. tech firms, late Sunday night, just hours before the tax was to go into effect. This is part of a move to progress the stalled U.S.-Canada trade negotiations. Silver spot rose 0.5%, to $36.16 an ounce. Platinum was up 1.9% at $1,364.72, and palladium gained 1.5%, to $1150.30. (Reporting and editing by Bernadettebaum in Bengaluru)
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HEDGE FLOW - Goldman Sachs says that hedge funds are selling energy stocks when oil prices fall.
Goldman Sachs' note from Monday shows that hedge funds sold energy shares at the highest rate since September 2024, and the second fastest in the past 10 years. Oil prices were falling on the back of easing Middle East tensions. Crude oil prices dropped over $10 following the cease-fire agreement between Israel and Iran. On Friday, oil prices shook on news of an increased supply of crude from the oil-producing group OPEC+. They remain below their recent high of $81. Goldman's note stated that hedge funds began selling energy-related stocks in every major region on June 23. Goldman's note sent to clients Friday said that the sales in the sector last week were the largest in nearly a year, and the second biggest in the past decade. The sale of shares in oil, gas, and consumable oil firms as well as energy equipment manufacturers and service providers was conducted. The note said that hedge fund sales were concentrated in every region, but especially North America and Europe. Goldman said that hedge funds in Europe increased their short positions while reducing long bets. A short position anticipates that asset prices will fall, whereas a long position anticipates an increase. The data showed that while many speculators increased their short positions against energy companies, the total combined position of speculators remained proportionally long on global energy shares. Goldman Sachs said that hedge fund gross leverage - a measure of how many hedge funds are involved - is at its highest level in five years. The bank added that hedge funds bought company shares in all global regions, and last week was the biggest stock-buying in five weeks. It said that the most popular stock sectors were financial, technology and industrial companies. Reporting by Nell Mackenzie, Editing by Dhara Raasinghe and Joe Bavier
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Copper prices are high as the market waits for US tariff clarification and trade talks.
On Monday, copper prices traded at a wide range on the London Metal Exchange (LME) and Shanghai Futures Exchange as investors awaited clarity about potential import tariffs and progress in U.S. Trade talks. As of 0700 GMT the price for three-month copper traded on the LME fell 0.06%, to $9,872.5 a metric ton, but was still on track to achieve a gain of 3.92% on the month. This is its second consecutive increase. The SHFE's most-traded copper contract gained 0.16%, to 79.870 yuan (11,150.36 USD) per ton. This was also higher for the second month in a row, and 2.8% more than the previous month. After President Donald Trump abruptly terminated negotiations with Canada, on Friday, he left the talks in a cloud of uncertainty. He called Canada's tax on U.S. technology firms a "blatant" attack and promised to impose tariffs on Canadian products within a week. While metal has been diverted to the U.S. due to expectations that it will be taxed on imports, there are shortages in other countries. "The continued squeeze on the LME also supported prices," ANZ stated. "Spot contracts for copper continue to trade at a huge premium to futures with a later date." The LME's warehouses are partly empty due to the record number of shipments made to the U.S. in anticipation of tariffs. Copper Stocks In LME-registered storages, Friday's total dropped by 1,800 tonnes to 91.275 tons, the lowest level since August 2023. Inventories In the SHFE monitored warehouses, the weekly average for the week ending Friday was 81,550 tonnes, the lowest level since May 9. LME lead rose 0.24%, to $2.049 per ton. Aluminium climbed 0.15%, to $2.599. Tin grew 0.04%, to $33,775. Zinc increased 0.04%, to $2.780. Nickel fell 0.13%, to $15,225. SHFE tin fell 0.6%, to 268,110 Yuan. Zinc gained 0.31%, to 22,495 Yuan. Nickel grew 0.17%, to 120,830 Yuan. Lead increased 0.03%, to 17,200 Yan, and aluminium rose 0.02%, to 20,580 Yan. Click or to see the latest news in metals, and other related stories.
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Sources say that the premium for Japan's Q3 aluminium has fallen to $108/T due to a lagging demand.
Six sources involved in the pricing discussions said that the premium for aluminium shipped to Japanese buyers from July to September is $108 per metric tonne, a 41% drop compared to current quarter. This reflects a sluggish market, they added. This figure is lower than the $182 paid per ton in April-June. It marks the second consecutive quarter decline, and the lowest since the first three months of 2024. The initial offer of $122 - $145 per tonne made by producers around the world is below this figure. Japan is the largest Asian importer for premiums and light metals For primary metal shipments, it agrees to each quarter pay over the benchmark London Metal Exchange cash price that is set as the benchmark for the area. A trading house source stated that domestic aluminium demand had been low for a little over a year before U.S. Tariffs were implemented. This was in reference to the Trump Administration's tariffs on cars and aluminium. The source said that the decline in Japan premiums is due to a lack of demand in Asia and an abundance of supply. Three major Japanese ports have large stocks of aluminium Marubeni reports that the total volume of coal sold in Japan at the end May was 331,000 tonnes, an increase of 3.3% over the previous month. Another source from a producer stated that soft premiums overseas also contributed to this drop. The source stated that "U.S. premiums increased briefly, but have since eased as buyers built up stock ahead of tariffs." He said: "We expect inventory to be cleared and premiums to rise in the next three months, which could lead to a tightening of Asian supply." The U.S. President Donald Trump has doubled the aluminium import tariffs from June 4, to 50% to support the domestic production of this metal, which is used in transport, packaging, and the construction industry. Metal industry sources reported that physical market premiums in the U.S. fell after reaching a record high of 62.50cents per lb, on June 6, as traders speculated on possible tariff reductions for Canadian shipments. Although the impact on Japan was limited, buyers are concerned that automakers' demand could fall. Tokyo wants Washington to exempt their carmakers from the 25% auto tariff. Japan will also face a 24% "reciprocal tariff" starting July 9 unless it negotiates a deal. Due to the sensitive nature of the issue, the sources refused to identify themselves. Late May, the quarterly price talks between Japanese buyers, global suppliers including Rio Tinto, South32, and others began.
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Australia's review of the market rules includes a gas reservation for the east coast
As part of an extensive review of the market rules, the Australian government announced on Monday that it would consider creating a reserve of gas on Australia's east coast. The Competition Regulator has warned about looming shortages on the east coast of the country. According to the most recent forecast, a gap will be created by 2028 if no new investments are made. The majority of reserves are in the remote north-west. The review will also aim to preserve Australia's reputation as an important reliable exporter of LNG. The market regulations are being reviewed. They include export controls, an east coast mandatory code that governs sales of fuel and government agreements with the major producers. In a press release, Climate Change and Energy minister Chris Bowen stated that it was important to use the review process to ensure we get the right settings in our gas markets, and secure affordable Australian gas for Australians, while also remaining a reliable exporter of energy and delivering long-term energy security in our area. The centre-left government of Prime Minister Anthony Albanese believes that gas will play a major role in the future, as the country rapidly moves away from coal-fired electricity stations. The review will look at the "effectiveness" and "coherence" (or consistency) of the existing rules. It will identify improvements, and consolidate rules in order to create a "stable regulatory climate" for investors. The focus will be on supply security, pricing and transparency of the market, as well as the impact of regulation on the competitiveness in the Australian LNG export industry. Bowen said at a press conference, when asked about the possibility of a gas reserve, that any new requirements were "prospective", without "ripping up current contracts". Several government policies have been criticized by industry players. It introduced wholesale price caps in 2022, in part to lower energy prices after Russia's invasion of Ukraine. Since then, the price cap is now part of the industry code. Japanese LNG importers - some of Australia's largest customers - have said that Labor's policies increased supply uncertainty and raised costs at gas plants in which they own stakes. Shell, ExxonMobil, and other major gas producers such as Queensland Curtis LNG, who export gas from the Bass Strait project, have all expressed concern. Reporting by Christine Chen, Sydney; editing by Edwina gibbs
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Russell: Coal was Australia's top commodity exporter, but gold will soon be the king.
Iron ore has surpassed coal as the top commodity exported by Australia. This is due to the increase in shipments to China of steel raw materials. Gold is now threatening to surpass coal. According to the latest quarterly report of Australia's government commodity forecaster, earnings from precious metal exports are expected to increase to A$56 Billion ($36.6 Billion) in the fiscal period starting July 1. The Department of Industry, Science and Resources released data on Monday that showed this figure was higher than the A$39bn forecast for metallurgical and thermal coal. The combined export earnings of A$67billion for 2025-26 are still higher than those for gold. Here's where things get interesting. It's possible that by 2026-27, gold will surpass the combined total of metallurgical and thermal coal used for steel production. The government anticipates that gold exports will increase to 313 tons by 2026-2027, from 289 tons during 2025-2026 and 250 tonnes in 2024-2025. It would be a major coup for Australia to become the world's largest net gold exporter and third-largest gold producer. The department is cautious about its gold price forecast, expecting that it will fall to $2.825 per ounce in 2026-27 from $3.200 in 2025-26. This is below the current spot rate of $3.273. Most analysts expect a price of $2.825 on average for 2026-2027, but the government forecaster has a history of being conservative. Gold could continue to rise 29% since Donald Trump was elected president of the United States for a second time in November. Trump has implemented and is planning a number of policies that are considered bullish for gold. Tax and spending policies would increase the fiscal deficit of the federal government, placing pressure on U.S. Treasuries to be a store value. The sweeping tax cut and spending bill proposed is edging closer to being passed by the Republican-controlled Senate and House of Representatives, and if successfully signed into law it is estimated by the non-partisan Congressional Budget Office that it would add $3.3 trillion to U.S. debt over a decade. Trump's tariff and trade policies are also uncertain, as his July 1 deadline for the United States to make deals with dozens major trading partners is looming. Even if Trump announces lower tariffs in April than he did, imports to the United States are likely to face higher taxes under Trump's second term than during his first term and when Joe Biden was president. The gold price is likely to rise as investors continue to look for alternatives to U.S. Treasuries, and other assets. Central banks and investors alike are expected to keep buying. Price Assumptions The current Australian dollar to U.S. dollar exchange rate would result in export revenues of A$61.6billion if a higher price of gold is assumed in 2026-2027, of $4,000 per ounce. The price forecasts may be overly optimistic, given the dynamics of the seaborne coal market. According to the government's forecast, metallurgical coke will average $201 per ton by 2026-2027. Thermal coal benchmark at Newcastle Port is expected to be $110 per ton. The Singapore Exchange closed its metallurgical coal contract at $178.50 per ton of coal on June 27. GlobalCOAL valued Newcastle thermal coal at $108,87 during the week ending June 27. Both prices are close to recent 4-year lows. The government expects the price of both types coal to rise slightly in the coming years. This would require that seaborne demand on major Asian markets like China, India and Japan, as well as South Korea, at least remain stable, if it does not improve. China and India are the world's two biggest coal importers and producers. They want to increase domestic production and reduce imports. This may restrict their seaborne imports. Japan and South Korea want to use cleaner fuels, such as liquefied gas. This may end up costing less than coal due to the flood of capacity that is expected to enter the market in 2027. It is possible that Australia will become the second largest commodity exporter in 2026/27 if gold continues its current upward trend and seaborne coal remains under pressure. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of a columnist, who is also an author.
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Dalian iron ore to gain for the first time in four months on strong near-term demand
Dalian iron ore prices rose on Monday, and they were expected to record their first monthly gain in four months due to strong near-term demand from top consumer China. However, a prolonged property crisis held back gains. The September contract for iron ore on China's Dalian Commodity Exchange ended the morning trading 0.21% higher, at 715.5 Yuan ($99.87). The contract has gained 1.71 % so far in June. As of 0346 GMT the benchmark July iron ore traded on Singapore Exchange was down 0.16% at $94.4 per ton. This is a drop of 1.3% for this month. According to Mysteel, hot metal production, which is a measure of iron ore consumption, was stable at 2.42 million tonnes as of 27th June. In a separate report, Mysteel stated that the average rate of blast furnace capacity utilization rose by 0.04 percentage points, reaching 90.83% for the period from June 20 to 26. A survey found that manufacturing activity in China fell for the third consecutive month in June. Analysts say that a weak domestic demand, combined with a long-lasting property crisis, causes factory owners in China to hold onto their inventory while they wait for Beijing to strike deals to ease tensions between the U.S. Investors expected rate cuts following comments by Federal Reserve Chair Jerome Powell last week, who said that rate cuts would be likely if tariffs did not cause inflation to spike. Dollar-denominated investments are cheaper for holders of currencies other than the greenback. Coking coal and coke, which are used to make steel, also rose, by 1.14% and 0.8%, respectively. The Shanghai Futures Exchange steel benchmarks have mostly increased. Rebar gained 0.43%; hot-rolled coil gained 0.22%; stainless steel gained 0.488%; and wire rod fell 0.21%.
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Gold recovers from over a one-month low due to weaker dollar
Gold reversed its course on Monday and increased, supported by the weaker dollar. It had previously hit a record low after easing U.S. China trade tensions lowered demand for safe haven assets and boosted risk appetite. Gold spot rose 0.3%, to $3,281.65 an ounce at 0216 GMT after reaching its lowest level since May 29, earlier in the session. U.S. Gold Futures rose 0.2% to $3,293.30. Tim Waterer, KCM Trade's Chief Market Analyst, said that there is less of an 'all is doom' outlook regarding both tariff talks as well as events in the Middle East. This is making gold play second fiddle behind risk assets. The dollar index dropped 0.2%, but Wall Street futures rose. The greenback price of bullion is less expensive when the dollar falls. Treasury Secretary Scott Bessent announced on Friday that the U.S.-China have settled issues relating to shipments of magnets and rare earth minerals into the U.S. He also said the Trump administration could complete its various trade agreements with other countries by Labor Day, September 1. Donald Trump, the U.S. president, abruptly ended trade talks with Canada over Canada's tax that targeted U.S. tech firms on Friday, claiming it was an "attack" and he will set a new rate of tariff on Canadian goods in a week. After a 12-day conflict, the ceasefire between Israel and Iran also seemed to hold. This further reduced demand for safe havens. The dollar is still under pressure, which limits the decline of gold. The $3,250 mark is a crucial support level for the gold price. Waterer warned that if this level is breached, losses could accelerate to the $3200 level. Gold's appeal as a safe haven is often reduced by stable geopolitical or economic conditions. Silver spot was down by 0.1%, at 36.02 per ounce. Platinum was up 1%, at 1,353.13, and palladium rose 0.2%, at $1135.48. (Reporting and editing by Harikrishnan Nair, Rashmi aich and Anmol Choubey from Bengaluru)
MORNING BID - Risks flow as trade discussions unclog
Wayne Cole gives us a look at what the future holds for European and global markets.
In Asia, the start of the week was already risky when the news broke that trade talks between Canada and the United States were back in action after Prime Minister Carney agreed not to implement a digital tax demanded by Trump. The new deadline is July 21. This extends Trump's original date of July 9.
Treasury Secretary Bessent suggested last week that they could be completed by Labor Day, September 1, if the talks are extended.
Wall Street futures have risen by around 0.4% to record highs, as investors pile in for megacaps ahead of the new quarter. European and German stock-futures are also up around 0.3%. The majority of Asian markets are in the black as well, thanks to a continued decline in oil prices due to the Mideast ceasefire.
Investors keep a close eye on the progress made by a massive tax-cutting bill and spending bill that is slowly making its journey through the Senate. There are signs that it may not reach Trump's July 4th deadline. In a bid to save time, Democrats have clerks read every line of the 940-page bill. They are likely the only people who know what it contains.
The Congressional Budget Office estimates that the bill will add $3.3 billion to the nation's national debt over a ten-year period, a test of foreign appetites for U.S. Treasury bonds and another blow to U.S. exceptionalism.
The dollar has seen the most impact, while the euro saw gains of 1,7% last week. James Reilly, a Capital Economics analyst, said that the dollar has fallen more this year than any other year since 1973, when the U.S. switched to a freely-floating currency.
This slide is forcing foreign investors to hedge against the dollar, which leads to more selling and a downward cycle of the currency.
Investors' expectations of Federal Reserve policy ease to 65 basis points over the remainder of the year have not helped either. It's still a long shot that a move in July will happen, but this could change if Thursday's payroll report is a disappointment. A rise in the unemployment rate to above 4.3%, for example, would bring it up to levels that have not been seen since the end of 2021. This would certainly alarm the Fed.
Market developments on Monday that may have a significant impact
The European Central Bank Forum in Sintra, Portugal begins
- German, Italian CPI data
Fed's Bostic & Goolsbee talk
(source: Reuters)