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Gold remains stable as Fed rate cuts bets counteract dollar strength
Gold prices were stable on Monday, as the growing expectation of a Federal Reserve interest rate cut next week helped to offset pressures from a strong U.S. Dollar. As of 1011 GMT, spot gold rose 0.1% to $4,070.97 an ounce. U.S. Gold Futures for December Delivery fell 0.3%, to $4.067.80 an ounce. Gold priced in greenbacks is more expensive to holders of other currencies. "Gold stabilized as investors assessed the prospect of a further Fed rate cut, after New York Fed president John Williams indicated there may be space to lower borrowing rates amid a softening labor market, while other officials struck a cautious tone," Ole Hansen said, head of commodity strategies at Saxo Bank. Williams said on Friday that the Fed's goal of inflation could be achieved without risking the interest rate cut. This would also help to prevent a job market slide. The CME FedWatch tool revealed that after Williams' dovish remarks on Friday, bets on a rate reduction next month had risen to 76%, up from 40%. In low-interest rate environments, gold, which is a non-yielding investment, does well. Investors are awaiting key economic indicators such as U.S. retail sale, unemployment claims, and producer prices due this week. Geopolitically, the U.S. will continue to work with Ukraine on Monday to develop a plan that would end the conflict with Russia. They had agreed to modify a previous proposal which was seen by many as being too favorable to Moscow. Gold struggles to gain momentum on Fed cuts likely being pushed. China demand worries, easing of trade risks. Standard Chartered noted that central banks are net buyers on the downside and continue to be concerned about Supreme Court ruling (on Trump's Tariffs). Palladium was down 0.4%, to $1369. Platinum rose 0.4%, to $1516.20 per ounce. (Reporting and editing by Mrigank Dahniwala, Saad Sayeed, and Noel John from Bengaluru)
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Indonesia seizes eight containers of imported zinc powder contaminated by caesium 137
An official announced on Monday that eight containers of imported caesium powder were seized by Indonesia after it was discovered to be contaminated. The country is intensifying its efforts to intercept goods contaminated at the border and within the country. Bara Hasibuan said that the containers were originally from Angola. They are being held in a Jakarta port until the administrative procedures to re-export them have been completed, according to a press release by Bara Hasibuan. Indonesia created a task force to address the issue of radioactive pollution after seafood, cloves, and footwear destined for the United States had levels of caesium that were unacceptable earlier this year. The task force reported that shipments of zinc-powder from the Philippines had previously been found to be contaminated with Cs137. These shipments were returned. Caesium 137 is released into the environment by past nuclear accidents and tests, such as Chernobyl. It's also used for industrial purposes like oil well logging. Indonesia does not have nuclear weapons or power plants. (Reporting and editing by David Stanway; Dewi Kurniawati)
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India's finished-steel imports from April to October were down 34% according to government data
According to preliminary government data reviewed on Monday, India's finished-steel imports in the first seven months were down 34.1% compared to the previous year. India, which is the second largest crude steel producer in the world, imported 3.8 millions metric tons (mt) of finished steel between April and October. It was also a net importer for the alloy. South Korea, China, Japan, and Russia were the top exporters of finished steel into India in the past year, with 1.4 million tons. The government reported that domestically, the steel prices were being pressured by a combination of weak demand and a high supply. "Trading activity was subdued due to the current festival season", it said. In October, it was reported that small steel producers struggled with a weak demand and falling price. The data shows that India exported 3.5 millions metric tons of finished iron and steel between April and October, an increase of 25.3% on the previous year. According to data, Italy and Belgium were followed by Spain as the largest markets for Indian Steel during this period. The data revealed that India's crude steel production in April-October was 95.7 million tons and its finished steel production 91.6 million tons. The consumption of finished steel in the period was 92.2 million tons, an increase of 7.4% on a year-on-year basis. (Reporting and editing by NehaArora; Jan Harvey)
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Investors say BHP needs to get past Anglo and focus on growth projects.
Investors said that BHP should focus on its own growth strategy and move away from Anglo American, following the Australian firm's last minute appeal to the London listed company, which is close to a $60 billion deal with Canada's Teck Resources. In recent days, the world's biggest miner contacted Anglo's board to determine if there was any interest in a merger. This was reported by Sunday. BHP announced on Monday that it would not pursue the bid, but instead focus its efforts on growth. The decision to leave comes before the votes of Teck and Anglo shares - scheduled for December 9th - that will create Anglo Teck a copper giant, with major development in Chile and Peru. Investors who were wary of top-of-cycle acquisitions said BHP's decision shows it is working hard to ensure its copper pipeline, which will be used to support the energy transition. Hugh Dive, who owns BHP stock at Atlas Funds Management of Sydney, said: "I believe that many BHP investors would be shocked to learn that BHP is still snooping around Anglo." BHP's growth projects will keep CEO Mike Henry busy, ranging from potash production to copper expansions to South America. Buying Anglo would add new complications, said Dive. BHP announced in July that its Jansen Potash Project was delayed and over budget. The project is scheduled to be operational by 2027. BHP is also pushing ahead with three options to grow copper in Argentina Chile and Australia. Jason Teh is the chief investment officer at Vertium Asset Management, based in Sydney. He said that M&A was always on the table as long as they added value. However, he also noted that existing shareholders are a delicate group to deal with. The question is, will the other party come to the table? If they fight tooth and nail, the buyer... may end up paying more than necessary. Stephen Butel said that the company should refine its operations, cut costs, and grow its existing businesses instead of increasing complexity. Platypus Asset management, which sold BHP's holdings last summer, was a portfolio manager. He said that organic growth was more valuable to shareholders than large-scale M&A deals such as the Anglo deal. BHP spent $2 billion in the last year to acquire a stake in two copper projects in Argentina, in partnership with Canada’s Lundin. It also pushed hard for production improvements at Escondida in Chile. The company is also planning to decide by mid-2027 whether or not it will double the South Australian production by the middle next decade. Joseph Koh, a partner at Blackwattle Investment Partners, based in Sydney and which holds BHP and Anglo shares, expressed his "somewhat relief" about BHP's apparent capital discipline. Details of the offer, however, have not yet been made public. He said: "We do not think BHP is making a crazy decision in their approach, because Anglo produces high-quality cobalt and we are very positive about the outlook for the copper." "For BHP, I think it's time to move forward." (Reporting and editing by Thomas Derpinghaus; Mel Burton, Melanie Burton)
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Gold remains stable as Fed rate cuts bets counteract dollar strength
Gold prices were stable on Monday, as the growing expectation of a Federal Reserve interest rate cut next week helped to offset pressures from a strong U.S. Dollar. As of 0851 GMT, spot gold was unchanged at $4,065.31 an ounce. U.S. Gold Futures for December Delivery fell 0.4% to $ 4,062.40 an ounce. Gold priced in greenbacks is more expensive to holders of other currencies. "Gold stabilized as investors assessed the prospect of a further Fed rate cut, after New York Fed president John Williams indicated there may be space to lower borrowing rates amid a softening labor market," said Ole Hansen. Williams said on Friday that the Fed's goal of inflation could be compromised by lowering interest rates, but this would help to prevent a job market slide. CME FedWatch showed that after Williams' dovish remarks on Friday, the odds of a rate reduction next month increased to 72%. In low-interest rate environments, gold, which is a non-yielding investment, does well. Investors waited for key economic indicators such as U.S. retail sale, unemployment claims, and producer prices due this week. On Monday, U.S. and Ukraine will continue to work on a plan that would end the conflict with Russia. They had agreed to modify a proposal which was seen by many as being too favorable to Moscow. Gold struggles to gain momentum on Fed cuts likely being pushed. China demand worries, easing of trade risks. Standard Chartered noted that central banks are net buyers on the downside and continue to be concerned about Supreme Court ruling (on Trump's Tariffs). Other metals such as palladium, platinum, and silver were also up. Palladium was up by 0.6% at $1,383.50, while platinum gained 2.4%. (Reporting and editing by Mrigank Dahniwala in Bengaluru)
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Investors say BHP needs to get past Anglo and focus on growth projects.
Investors said that BHP should focus on its own growth strategy and move away from Anglo American, following the Australian firm's last minute appeal to the London listed company, which is close to a $60 billion deal with Canada's Teck Resources. In recent days, the world's biggest miner contacted Anglo's board to determine if there was any interest in a merger. This was reported by Sunday. BHP announced on Monday that it would not pursue the bid, but instead focus its efforts on growth. The decision to leave comes before the votes of Teck and Anglo shares - scheduled for December 9th - that will create Anglo Teck - a copper giant, with major development in Chile and Peru. Investors who were wary of top-of-the cycle acquisitions said BHP's decision shows it is working hard to shore-up its copper pipeline, which will be expected to support the energy transition. Hugh Dive, who owns BHP stock at Atlas Funds Management of Sydney, said: "I believe that many BHP investors would be shocked to learn that BHP is still snooping around Anglo." BHP's growth projects will keep CEO Mike Henry busy, from potash production to copper expansions, in South America and Canada. Buying Anglo would add new complications, said Dive. BHP announced in July that its Jansen Potash Project was delayed and over budget. The project is scheduled to be operational by 2027. BHP is also pushing ahead with three options to grow copper in Argentina Chile and Australia. Jason Teh is the chief investment officer at Vertium Asset Management, a Sydney-based asset management firm. The question is, will the other party come to the table? If they fight tooth and nail, the buyer... may end up paying more than necessary. Stephen Butel said that the company should refine its operations, cut costs, and grow its existing businesses instead of increasing complexity. Platypus Asset management, which sold BHP's holdings last summer, was a portfolio manager. He said that organic growth was more valuable to shareholders than large-scale M&A deals such as the Anglo deal. BHP spent $2 billion in the last year to acquire a stake in two copper projects in Argentina, in partnership with Canada’s Lundin. It also pushed hard for production improvements at Escondida in Chile. The company is also planning to decide by mid-2027 whether or not it will double the South Australian production by the middle next decade. Joseph Koh, a partner at Blackwattle Investment Partners, based in Sydney and which holds BHP and Anglo shares, expressed his "relief" that BHP was showing some capital discipline. Details of the offer, however, have not yet been released. He said: "We do not think BHP is making a crazy decision in their approach, because Anglo produces high-quality cobalt and we are very positive about the outlook for the copper." "But BHP is probably ready to move on." (Reporting and editing by Thomas Derpinghaus; Mel Burton, Melanie Burton)
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Iron ore futures reverse a two-day decline on China's policy signals and supply disruptions
Iron ore futures recovered on Monday, ending a two session losing streak. News of policy support from China, and new supply disruptions, fueled the bullish sentiment. The January contract for iron ore on China's Dalian Commodity Exchange traded 0.44% higher, at 790.5 Yuan ($111.23). As of 0700 GMT, the benchmark December iron ore traded on Singapore Exchange rose 0.87% to $104,85 per ton. ANZ analysts said that iron ore prices rose last week as Chinese state media suggested Beijing could provide support to the property market, including mortgage subsidies for new buyers, increased income tax rebates and lower housing transaction fees. Broker Galaxy Futures said that recent supply disruptions have supported iron ore price, affecting short-term market sentiment. Last week, China's state owned iron ore purchaser ordered steel mills in China to stop purchasing a particular type of BHP ore. This ban was added to an existing one and escalated a dispute about a new contract. China Iron & Steel Association's latest monthly report says that despite the fact that inventories are high and the demand is easing as we move into winter, domestic steel prices will remain under pressure in the near future. According to data from the World Steel Association, while global steel production declined 5.9% on an annual basis in October, crude output in China, the top producer and consumer, fell 12.1%. SteelHome data shows that total iron ore stocks across Chinese ports increased by 0.03% on a week-on-week basis to about 139.6 millions tons as of November 21. Coke and coking coal were both up, but coking coal was down by 1.48%. The Shanghai Futures Exchange steel benchmarks were mostly in the green. Rebar gained 0.95%. Hot-rolled coils gained 0.67%. Wire rod rose 1.09%. Stainless steel dropped 0.2%.
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Investors weigh US interest rate outlook as the dollar strengthens and gold falls
Gold prices fell for the third consecutive session Monday as the dollar strengthened near six-months highs and investors awaited further clarity about the U.S. rate trajectory. As of 0636 GMT, spot gold fell 0.3% to $4,055.73 an ounce. U.S. Gold Futures for December Delivery fell by 0.7% to $4.052.40 an ounce. The dollar index has reached a six-month high, is above 100 and will continue to do so if it trades above that level, which could put further pressure on the gold price, said Jigar Trivedi. Senior research analyst at brokerage Reliance Securities. Gold priced in greenbacks is more expensive to holders of other currencies. According to CME FedWatch Tool, the probability of a Fed interest rate cut in December dropped to 69% from 74% the previous day. Following the dovish remarks of New York Fed President John Williams, bets on rate reductions increased to 74%. The other Fed members were more hawkish. Dallas Federal Reserve president Lorie Logan called for the policy rate to be held "for a while" and the Fed presidents of Chicago and Cleveland warned that further cutting rates now would have a variety of negative effects on the economy. In low-interest rate environments, gold, which is a non-yielding investment, does well. Trivedi said that the next three to five week period will be characterized by a flattish or negative tone in gold, as the bulls are not likely to receive any major support in the absence geopolitical tensions. Monday, the U.S. and Ukraine will continue to work on a plan that ends the war with Russia. They have agreed to modify a proposal which was seen by many as being too favorable to Moscow. Palladium rose by 1.1%, while platinum increased 1.6%, to $1,535.85. Spot silver remained flat at $49.99 an ounce. (Reporting and editing by Sherry Phillips in Bengaluru, Mrigank Dhaniwala, and Ishaan rora from Bengaluru)
Investors bet on the December Fed cut, and stocks rise.
Investors began a week of events on a positive note on Monday as they took comfort in the growing expectation that the Federal Reserve will cut rates by December, even though policymakers are divided on such a move.
The markets are preparing for possible catalysts. These include the release of U.S. retailer sales and producer price data, due later this week. Meanwhile, British Finance Minister Rachel Reeves will unveil her much-anticipated budget on Wednesday.
Geopolitical events are also a focus. The U.S., Ukraine and other countries are working on a plan that will end the conflict with Russia. They have modified an earlier proposal which was deemed by Kyiv and Europe to be too favorable to Moscow.
This weighed down on oil prices, as the deal could theoretically allow more Russian production through a relaxation of sanctions.
EUROPEAN STOCKS CATCH-UP
The European stock market rallied early in the trading session, catching up with Wall Street's late Friday rebound. This follows days of turmoil, fueled in part by concerns over high tech valuations.
The STOXX 600 index, which finished last week with a 2.2% loss, gained 0.5%.
The shares of defence companies fell, but this was offset by the gains made in banks, tech and drugmakers.
Nasdaq and S&P futures both rose by 0.8% and 0.55%, respectively. Overnight, MSCI’s broadest Asia-Pacific share index outside Japan also rose 1%.
John Williams, a prominent Fed policymaker, said on Friday that rates could fall "in a near-term" and raise the possibility of reducing them again in December.
Goldman Sachs' chief economist Jan Hatzius wrote in a report that "we expect another Fed reduction in December followed by two additional moves in March 2026 and June 2026, which will bring the funds rate down to 3-3.25%."
The risks of more cuts are likely to be a reality in 2019, as the news about underlying inflation is positive and the decline in the employment market could be hard to control with the modest growth we expect.
Fed funds futures indicate that there is a 60% chance the Fed will reduce by 25 basis points in January.
DATA FOG PERSISTS
The record U.S. shutdown, which ended earlier this week, has clouded the outlook of U.S. interest rates as policymakers struggle with data gaps that would normally inform their view on the world's biggest economy.
The U.S. Bureau of Labor Statistics announced on Friday that it would not be releasing the October Consumer Price Report due to the shutdown which prevented data collection.
Senior economist Paolo Zanghieri of Generali Investments said that he and his colleagues believed the market had priced in more rate reductions than the Fed could deliver.
"We think the chances of a reduction next month are 50/50." He said that given the limited number of new data, the Fed would be justified in waiting until January to signal an easing bias.
"More important, the market's expectations of nearly four cuts in 2015, based on hopes of rapid deflation, seem overly optimistic. He added that we expect 50 basis points to be eased by the summer.
ALERT FOR YEN INTERVENTION
The yen was the main focus of the currency market, with the yen trading at a low near its 10-month-low, while the dollar rose 0.3%, to 156.86yen. The Japanese currency has dropped in value by around 1.8% so far this November, making it the worst performing major currency against dollar.
The yen has been under pressure due to growing concerns about Japan's fiscal health, low domestic rates and the possibility of Japanese intervention.
Last week, Finance Minister Satsuki Catayama increased her verbal efforts in support of the currency. This seems to have given the currency a temporary floor.
"Dollar/yen is going to go up even if you intervene. They will have to accept this. They can only intervene to slow down the pace, but they cannot stop the direction. Saktiandi Supat, Maybank's regional head of FX strategy and research, said: "I don't believe that they will be able to change the course."
The dollar fell against the majority of other currencies due to the expectation that the Fed will cut rates in the next month. The euro rose 0.16%, to $1.15295. The pound was unchanged at $1.3098 before Wednesday's announcement of the budget.
Brent crude futures dropped 0.5% to $62.27 per barrel while spot gold remained at $4,064 per ounce.
(source: Reuters)