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Gold to suffer third weekly loss due to stronger dollar and reduced Fed rate cuts
Gold prices were stable on Friday but are on track for a third successive weekly loss, due to a stronger dollar, and lowered expectations of U.S. interest rate cuts. Meanwhile, uncertainty over U.S. tariffs against trading partners provided support. As of 0733 GMT, spot gold was unchanged at $3,288.89 an ounce. Bullion has fallen 1.4% this week. U.S. Gold Futures declined 0.3% to $3339.90. Gold is now more expensive to other currency holders due to the dollar index reaching its highest level since 29 May. Gold remains weighed down by lower bets on Fed rate cuts through 2025. The U.S. weekly jobless claims and PCE data this week also reinforced the Fed's unwillingness to commit to a cut in rates," said Han Tan. Fed kept rates at 4.25% to 4.50% on Wednesday, dampening expectations of a rate cut in September. U.S. president Donald Trump slapped tariffs on exports of dozens of trading partner countries, including Canada. Brazil, India, and Taiwan. He is pressing forward with his plans to reorder global economy before a Friday deadline for trade deals. Tan stated that "the precious metals should be supported despite the uncertainty of the impact of U.S. Tariffs on global growth." Inflation in the United States increased in June, as tariffs on imported goods began to increase the price of certain goods. Investors will now be assessing the Federal Reserve’s policy direction as they await the U.S. employment data due on Friday. July job growth is expected to have slowed, and the unemployment rate is projected to increase to 4.2%. In an environment of low interest rates, gold, which is often viewed as a safe haven during times of economic uncertainty, performs well. The physical gold demand on key Asian markets has improved this week, as the price drop has sparked a renewed interest in buying. However, volatility is keeping some buyers cautious. Silver spot fell by 0.7%, to $36.50 an ounce. Platinum dropped 0.8% to $1,278.40, and palladium was off 0.2% at $1188.28. All three metals are headed to weekly losses. (Reporting and editing by Harikrishnan Nair in Bengaluru, Anmol Choubey)
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China's copper production in 2025 is set to reach a record high despite shortages of feedstock
Analysts say that China's refined output of copper is expected to reach a new record in 2025 as its giant smelting industry powers through the global shortage of ore copper, which is forcing out some overseas competitors. Five analysts estimate that the refined copper production in China will increase between 7.5% to 12% and surpass the record of 13,64 million metric tonnes set last year. Copper is essential for power, construction, and manufacturing. Growing output in China, the world's largest producer and consumer, is sucking up copper concentrate. This is the main ingredient used by smelters. It is increasing pressure on competitors, and cementing China’s dominance in the industry. Concentrate supply began to tighten in late 2023, as mine closures and rapid expansion of smelting capacities in China exacerbated anaemic growth. Processing fees, the amount smelters pay to convert concentrate into metal, fell to record lows. Profitability was also cut and some smelters outside China were forced to stop production. Alice Fox, commodities analyst at Macquarie Group, explained that Chinese smelters were able to increase their output faster than imports of concentrates because they had depleted inventories, and used scraps from government consumer goods exchange programmes. Fox stated that "Chinese refinery production was impressively high year-to-date despite low treatment costs and tight concentrates." China's refined output of copper grew by 9.5% during the first half of this year. Many of its modern smelting facilities offset losses in part with increasing revenue from the sale of byproducts such as sulphuric acids and rare metals. Analysts had predicted that global ore supplies would increase by 0.3% to 0.87% in 2025. However, China's imports of copper concentrate grew 6.4% during the first half of this year. This left smelters with insufficient ore for processing in other regions. Sinomine Resource Group, a Chinese company, announced last month that it temporarily suspended operations at its Tsumeb facility in Namibia due to a shortage of concentrate. Glencore's Philippine copper smelter was put into maintenance by Glencore in February due to the challenging market conditions. Analysts predict that global refined copper production will grow between 0.9% to 2% this coming year. According to Benchmark Mineral Intelligence, China's share of the global refined copper output will increase to 57% in this year. BETTER DEMAND The growth in China's output is being driven by stronger-than-expected exports plus growing investment in the power grid sector, both of which are leading analysts to revise up their copper demand forecasts. BMI has increased its forecasts for China's growth in copper demand this year from 2.9% to 3.8%. This is compared to a forecast at the start of the year of 2.9%. Macquarie raised its forecast from 2.4% to 4.2%. It is expected that the big increase in production will also pull down China's refined imports of copper, which stood at 3,74 million tons in 2024 or around 20% of China's national demand. BMI predicts that imports will drop by 8% by 2025. Imports of refined copper have dropped by 8.6% during the first six months of this year. This is partly because traders shipped more cargoes into the United States in order to avoid the tariffs on copper that U.S. president Donald Trump has threatened since February. The market has been able to counteract the increasing supply of copper with the benchmark prices up 8.8% this year. Trump surprised the markets on Wednesday by reducing tariffs on copper wire and pipes to 50%. This was a far cry from the restrictions he had threatened, and it excluded copper concentrates, cathodes, and ores. Zhao Yongcheng, BMI's Zhao Yongcheng, says that the lower-than-expected tariffs will not have a significant impact on Chinese copper demand or production.
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Ireland's AIB is seeing a slower growth in loans due to SMEs and US renewables woes
AIB Group anticipates a slower loan growth in 2019 due to a subdued lending environment to Irish small business and fewer renewable energy projects being funded by the United States. However, it reiterated its forecast for growth to return to 2026 or 2027 on Friday. AIB, Ireland's dominant lender, kept its guidance for net interest income and stated that it expects a return on tangible assets (ROTE) of over 20%, compared to an earlier forecast which was significantly ahead of the 15% target. After a series of rate cuts by the European Central Bank, first-half after-tax profit fell by 16% from 1.1 billion euro in 2024 to 927 millions euros ($1.1 billion). AIB shares fell 2.6% in the early trading. After the growth slowed in the first half, it was reduced to 3%. The bank still expects a compound annual growth rate of 5% in the next two-year period. AIB has identified the U.S. market as one of its major growth areas and has targeted it as a strategic area for growth. The U.S. President Donald Trump’s tax and spending bill, passed last week, speeds up the phase out of tax credits for solar and wind projects by several years. Donal Galvin, AIB's finance chief, said that the bank had "read the mood" and already reduced its expectations of activity in the U.S. during the first half. He said that the bank will invest in solar but that wind projects are no longer feasible. Galvin, who is the CEO of the bank, said that it will pivot its focus to projects in Ireland, Britain and mainland Europe. This market, Galvin added, was very active, but also highly competitive. He said he expected to see a pickup in lending for small and medium-sized businesses in Ireland after Sunday's U.S. - European Union tariff deal. Galvin said that the worst-case scenario had been avoided, so they now have some certainty in their plans.
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The weekly iron ore loss is a sign that China's stimulus has faded
The iron ore futures price was little changed Friday, but set to lose weekly value as the expectations for more stimulus from China, the top consumer, for its struggling property sector, faded. This dimmed demand prospects for this steelmaking component. The September contract for iron ore on China's Dalian Commodity Exchange closed the daytime trading 0.19% lower, at 783 Yuan ($108.60), a metric tonne. This marked a fall of 2.1% in a week. By 0700 GMT, the benchmark September iron ore traded on Singapore Exchange had risen 0.49% to reach $100.25 per ton. The price has fallen 2.9% this week. The Chinese Politburo's meeting in July, which sets the course of the economy for the rest of the year, did not provide any stimulus to the property sector. This is a major obstacle for industrial materials like steel. Analyst Zhuo Guqiu at Jinrui Futures said that the meeting had set a positive tone in the economy, and therefore, it was less urgent to implement more stimulus policies. China's purchasing manager's index (PMI), which fell to its lowest level since April last year, also raised concerns about demand. In July, it was 49.3, missing the median forecast of 49.7, according to a survey, and down from 49.7, in June. This shows a weakening in demand both at home and abroad. Zhuo, of Jinrui Futures, said that falling demand was also a factor in affecting prices for the main steelmaking ingredient. The average daily hot metal production fell by 0.6% compared to the previous week and reached 2.41 million tonnes in the week ending July 31. This was the lowest level for three weeks. Iron ore demand is usually gauged by the hot metal production. Coking coal and coke, which are both steelmaking ingredients, were down by 8.88% and 3.3% respectively. The Shanghai Futures Exchange has seen a decline in most steel benchmarks. Rebar fell 1.2%, hot-rolled coil and wire rod dropped 0.6% while stainless steel remained unchanged. ($1 = 7.2110 Chinese Yuan) (Reporting and editing by Eileen Soreng, Subhranshu S Ahu and Lewis Jackson)
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Nippon Steel warns about a full-year loss after $1.3 Billion Q1 shortfall
Nippon Steel revised its forecast on Friday for the full fiscal to a loss of 40 billion yen (266 million dollars) from a profit of 200 billion yen previously. This was partly due to costs associated with its acquisition by U.S. Steel. After 18 months of trying to get the U.S. Government to approve the deal due to concerns about national security, Nippon Steel closed its $14.9billion acquisition of U.S. Steel in June. Nippon Steel announced that its full-year results would be affected by a special loss related to the U.S. Steel transaction, namely a loss of 231.5 bn yen relating to the transfer of 50% of the joint venture AM/NS Calvert, to partner ArcelorMittal. Nippon Steel reported a loss of 195.83 Billion Yen for the three-month period ending June 30. This was higher than expected by analysts. Analysts surveyed by LSEG had predicted Nippon Steel would post quarterly losses of 25.7 billion yen. It reported a quarterly net profit of 157.56 billion yen a year ago. Nippon Steel also decided to split its stock at a ratio five shares per one share, effective October 1. S&P, the global rating agency, downgraded Nippon Steel last month to 'BBB+,' from a previous 'BBB+,' with a "negative" outlook. The reason given was an increase in financial stress following Nippon Steel's acquisition by U.S. Steel. ($1 = 150,5440 yen)
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Oil prices rise as tariff concerns and Russian supply threats compete for attention
The oil prices were not much different on Friday, after having fallen more than 1% the previous session. Traders were digesting the impact of increased U.S. Tariffs which may slow down economic growth and reduce global fuel demand. Brent crude futures fell 7 cents or 0.1% to $71.63 per barrel at 0656 GMT. U.S. West Texas Intermediate Crude was down 10 Cents, or 0.14 %, to $69.16 per barrel. Brent prices will still rise by 4.9% this week, while WTI will climb by 6.4%. This is after U.S. president Donald Trump threatened earlier in the week to impose tariffs on Russian crude buyers, including China and India, as a way to put pressure on Russia to end its war with Ukraine. Suvro Sarkar is the energy sector team leader at DBS Bank. He said that the recent bullishness of oil prices was largely due to the completion of trade agreements, with a few notable exceptions. Further progress in trade negotiations with China could boost the confidence of oil traders in the future. Investors were focused more on Trump's new tariffs, which are largely higher, that will be imposed on U.S. trade partners from August 1. Trump signed an Executive Order on Thursday that imposed tariffs of 10% to 41% for U.S. imports coming from dozens countries and territories, including Canada and India. Analysts have warned that the new levies could limit economic growth because they will increase prices and affect oil consumption. There were signs on Thursday that the existing tariffs in the U.S. are already driving up prices. The U.S. is the largest economy and the biggest oil consumer. Inflation in the United States increased in June, as tariffs increased prices of imported goods like household furniture and recreational products. The data supports the view that the price pressures will increase in the second half and the Federal Reserve may delay interest rate cuts to at least October. The oil price could be affected by maintaining interest rates, as high borrowing costs can hinder economic growth. Trump's threat to impose secondary tariffs of 100% on Russian crude buyers has supported the price because there was concern that this would disrupt oil trade and remove some oil off the market. DBS' Sarkar stated that India's slowing down of Russian imports could lead to a curtailment in supply, but this would be largely negated by Chevron's resumption of oil production Venezuela, record U.S. output, and growing U.S. supplies. JP Morgan analysts wrote in a note published on Thursday that Trump’s warnings of sanctions against China and India for their continued purchases of Russian crude oil could put 2,75 million barrels of Russian seaborne exports of oil at risk. Both countries are among the top three crude oil consumers in the world. Analysts said that the Trump administration will find it impossible to sanction the second largest oil exporter in the world without driving up oil prices. They were referring to Russia. Reporting by Georgina Mccartney in Houston. Christian Schmollinger, Mark Potter and Christian Schmollinger edited the article.
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In Dien Bien, Vietnam, flooding leaves 14 dead and missing.
State media reported that heavy rains caused flooding in the province of Dien Bien located in northern Vietnam. At least 14 people were killed or are missing. After hours of heavy rainfall, floodwaters rose quickly Thursday night, flooding low-lying houses and causing mudslides and flash floods in mountainous areas of the province. According to the report, the mountain village of Xa Dung was the most affected, with six people missing and one person dead. According to a provincial People's Committee statement, flooding has cut off power and traffic lines in several areas of the province. According to a statement, rescuers have yet to locate the bodies of two children who were buried by mudslides in Hang Pu Xi. According to media reports, the heavy rains in the province are hampering the search for missing persons.
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ASIA GOLD-Gold Demand in Key Asian Hubs Improves amid Price Correction
The physical gold demand on key Asian markets has improved this week, as the price drop has sparked a renewed interest in buying. However, volatility is keeping some buyers cautious. On Wednesday, spot gold fell to its lowest level for a whole month and was on track to suffer a third consecutive loss. This week footfall was higher than the previous week. "Buyers were asking about the price trends and made small purchases," said an Indian jeweller based in Pune. The domestic gold price was around 97.700 rupees for 10 grams of gold on Friday, after reaching 100.555 rupees the previous week. Indian dealers offer discounts The difference between official domestic prices and the price of gold has decreased to $7 per ounce, including 6% import duties and 3% sales taxes, as opposed to up to $15.00 last week. A Mumbai-based bullion seller with a private banking firm said that jewellers wanted to purchase items to replenish their inventory following a correction of overseas prices. However, a significant fall in the rupee partially offset the effect of the price drop. The World Gold Council announced on Thursday that India's gold demand in 2025 will fall to its lowest level in five years, due to record high prices. Dealers in China quoted gold at a range of prices, ranging from a discount of $4,2 to a premium up to $12 per ounce over international rates. Hugo Pascal is a precious metals dealer at InProved. He said, "China appears slightly to buy the dip in Gold... Trading volume for the physical contract AU9999 has been increasing (11 tons were traded yesterday), reflecting renewed interest in the Metal." Hong Kong gold Singapore sold the same product at a $1.50 price premium. Prices ranged from parity to a $1.40 surcharge. In Japan, bullion Was sold at par with a premium $0.60. There was a lot of demand for buying if the price even dropped slightly. A Japan-based trader stated that gold was being bought as an asset amid low interest rates, regardless of the Japan-U.S. deal. (Reporting from Anmol Choubey, Bengaluru, and Rajendra Jadhav, Mumbai)
The world stock market is mixed due to weak economic data, but also positive earnings.
The world stock market was mixed on Thursday as markets considered a range of economic indicators, including central bank rate decisions and inflation data, along with last-minute negotiations for a trade agreement ahead of U.S. president Donald Trump's deadline of August 1.
Bank of Japan has recently increased inflation forecasts and held interest rates, indicating cautious optimism about Japan's economy.
Japan's short-dated bond yields rose at one point to their highest level since early April. However, they retreated after the BOJ policy statement caused market participants to delay expectations of any future interest rate increases.
The Nikkei closed just under 1% higher, and the yen gave up its early gains.
Investors also focused on earnings. Nasdaq Futures rose 1.4% following better-than-expected results from Microsoft and Meta Platforms. S&P futures increased by over 1%.
Dan Coatsworth is an investment analyst with AJ Bell. He said, "Microsoft and Meta have just delivered earnings that most companies only dream about."
Investors are ecstatic because they've smashed the market predictions by a mile.
Stock indexes across Europe were also supported by earnings. Around 1025 GMT, the Stoxx 600 pan-European index remained steady.
The index is expected to finish the month up 1.6% as improved economic data from the U.S., Europe and other countries was better than expected.
Standard Chartered, France's Societe Generale and the region's banks all posted gains of over 1.5% Thursday following positive results.
MSCI's world-wide index was flat. This was due to the decline in Chinese shares after official PMI gauges revealed weaker economic activity than expected during July. China's blue-chip CSI 300 index ended 1.8% down, its largest single-day drop since April 7. Hong Kong's stock index also closed 1.6% down.
Investors in Asia also considered the implications of the trade agreement between the U.S.A. and South Korea, as well as whether Trump’s initial announcement that a 25% tariff would be imposed on India should have been taken seriously. This was especially true since it came in the middle trade negotiations.
The benchmark Nifty 50 index in India is just barely in positive territory, after recovering earlier losses.
The Korean won rose 0.3% following Trump's announcement that the U.S. will impose a 15% tariff for imports from South Korea. In return, South Korea would invest $350 billion into U.S. projects as well as purchase $100 billion of U.S. products in energy.
The announcement is part of a series that was rushed to be made before the deadline of Friday, April 2, in order to avoid the imposition by Trump of his "Liberation Day", or April 2 tariffs.
Copper futures fell 19.4% as Trump announced that the U.S. will impose a tariff of 50% on copper pipes, wiring and other copper products. This was far less than the expectations of more sweeping restrictions.
On Hold
The Federal Reserve’s rate-setting panel voted on Wednesday 9-2 to keep U.S. interest rates unchanged for the fifth time in a row. Two Fed governors dissented for the first times in over 30 years.
The comments made by Fed Chairman Jerome Powell after the decision undermined confidence in the ability of borrowing costs to fall in September.
The dollar index remained steady at 98.718, down from its two-month high, 99.987, which it reached on Wednesday. The index will gain 3.1% for the month. This is its first increase since 2025.
"Although Federal Reserve kept rates at their recent rate setting decision the possibility of rate reductions at upcoming meetings remain live, as they balance the softening economy data with the possible for persistent inflation," Manusha Samanthaweera, Fixed Income Investment Director at Capital Group.
The U.S. Gross Domestic Product growth was higher than expected during the second quarter. However, the details painted a picture that showed an economy in decline and plagued with uncertainty due to Trump's protectionist policies.
Brent crude futures, for September delivery, were down 26 cents at $72.98 per barrel. U.S. West Texas intermediate crude for September was down 25 cents at $69.75 per barrel as traders exited their positions that would expire on Friday.
Brent crude futures for October also dropped 33 cents, to $72.13, amid reports that EU tariffs on crude palm oil and kernels may be removed. Reporting by Nell Mackenzie, Gregor Stuart Hunter. Additional reporting by Ankur Banerjee. Jamie Freed, Mark Potter and Mark Potter edited the article.
(source: Reuters)