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Gold gains following US PPI data and focus on Middle East tensions
The gold price reversed its earlier declines on Wednesday, after U.S. producer prices unexpectedly dropped in June. However, escalating Middle East tensions?limited gains as they kept inflation and interest rate concerns alive. By 1258 GMT, the spot price of?gold? rose 0.3% to $4067.60 an ounce at 858 AM EDT. U.S. gold futures rose 0.2% to $4 075.80. Phillip Streible is the chief market strategist for Blue Line Futures. He said that gold has recovered from its earlier losses as PPI was lower than expected. This eases some concerns regarding multiple interest rate hikes by the Fed this year. According to the Bureau of Labor Statistics of the Labor Department, last month's Producer Price Index fell 0.3% after a downwardly-revised 0.6% rise in May. The PPI was expected to remain unchanged by economists polled, after a 1.1% increase in May. CME FedWatch Tool data shows that traders expect a 9.1% chance of an increase in interest rates at the Federal Reserve meeting on July, as opposed to 16.6% before data. Data on Tuesday also showed that U.S. consumer prices slowed down more than was expected in June. The U.S. announced that it had begun a second wave of attacks against Iran, after reimposing a naval blocade?of Iranian ports. Iran, meanwhile, threatened to cut off even more regional energy exports. Oil continued to rise on Wednesday. Recent developments in the 'Strait of Hormuz' have simply re-ignited fears about unchecked price pressures. If tensions escalate further and oil prices rise, gold could be exposed to downside risks, said Lukman tunuga senior research analyst of?FXTM. A solid break below this level may open the doors to $3,950 or $3,000. If $4,000 is a reliable support level, the price may rise back to $4,100." Fuel costs may continue to drive inflation, prompting central banks to keep rates at high levels for longer. This could also affect gold's appeal as an asset that doesn't yield. Platinum gained 0.4%, bringing the price to 1,638.24. Spot silver fell 0.1%. Palladium dropped 0.1% to $1.303.50. Reporting by Ashitha Shivprasad in Bengaluru and Sukanya Mittra; editing by Shilpa Majumdar
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Russian government prioritizes fuel for vehicles serving food retail chains
Alexander Novak, the Deputy Prime Minister, said on Wednesday that Russia is considering prioritising fuel supplies to vehicles servicing large food retail chains. The government is concerned about fuel shortages, which are a result of the Ukrainian drone attacks against Russia's oil refineries and energy infrastructure. Two industry sources and a? After Ukrainian drone attacks caused a stoppage at large oil refineries, Russian gasoline production fell to an amount?equivalent only to around 65% the seasonal average consumption. "We discussed the importance of prioritizing fuel supplies for vehicles that deliver food products to major retail chains. Novak stated that it is crucial to avoid food spoilage and to avoid additional costs which could be reflected on consumer prices. Fuel cards are usually issued by the authorities for drivers to use when filling up their vehicles. He said that the task force set up by the government to combat the fuel shortage discussed diesel supply to the agricultural industry. The decline in fuel production in Russia will have an impact on the country's economy in the second quarter 2026, according to the central bank of Russia.
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German Government Plans EUR 13.3 Billion Energy Relief Package for 2027
The German Finance Ministry announced on Wednesday that the government will provide energy cost relief packages for businesses and consumers in the amount of EUR13.3 billion ($15.2 billion) by 2027. These funds are to be drawn from KTF (the Climate and Transformation Fund). The package includes a subsidy to electricity grid fees, and relief for energy-intensive industry through an industrial electricity pricing scheme, as well power-price compensatory measures that help offset costs associated with carbon pricing. According to the KTF business plan for 2027, and the financial planning of the government up to 2030, by 2030, EUR13.2 billion will be redirected to the core budget. Since the beginning of the Iran War, energy costs have increased sharply. This has put pressure on Germany's manufacturing and energy-intensive industries. German companies, such as automakers and steelmakers had complained about high energy costs before the war. The amount of relief granted is EUR2.5billion higher than that planned for 2026. More than EUR5.5billion has been allocated to grid charges. EUR5billion to compensations on power prices and approximately EUR2.5billion to industrial electricity rates. CUTS ELSEWHERE INSIDE CLIMATE FUND The government reduces spending in other areas of the climate fund at the same time. Finance Ministry said that funding for KTF programs not committed will be reduced by 30% in general, but some projects will be exempt. The support for electric vehicle transition, for instance, will be cut by 10% or EUR200million through 2029. Existing commitments will not be affected. The federal government approved the?proposed budget for 2027 and financial planning until 2030 last week. This plan did not include any plans for the KTF. The KTF budget will be able to close its deficits by utilizing the EUR2.7 billion that would have been generated from emissions trading revenue in 2027. The ministry announced that EUR22.5 billion of the KTF's planned EUR40.3billion spending?in?2027 has already been allocated?for modernisation project. The economic plan will be approved by the parliament along with the federal budget towards the end of November.
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Buffett: Gates Foundation decision not to accept donations was not a shock
Warren Buffett stated that it was no surprise to him when he informed Bill Gates of his decision to cease donating to the Gates Foundation. This ended their?two decade philanthropic relationship. Buffett, 95, did not include the Gates Foundation as part of a $6 billion donation to Berkshire Hathaway announced on Tuesday. This was in response to revelations regarding interactions between Bill Gates - the Microsoft cofounder and philanthropist - and the late sex offender Jeffrey Epstein. Buffett, the chairman of Berkshire, told CNBC's?on Wednesday that Gates and Buffett spoke three weeks ago, when Gates was in Omaha. The meeting was held after the Department of Justice released in February documents about Gates' relationship with Epstein. Gates also met with the Congress last month. Gates has expressed regret over Epstein and his involvement in the case. Buffett said, "I reevaluated the whole situation." It was not a shock. He said: "I'd read everything." I'd read it all. His children Susie Howard and Peter will continue to donate Berkshire shares, which includes the $6 billion donation, to four family foundations. Epstein, who was arrested on charges of sex-trafficking in August 2019, died in a Manhattan prison?cell. The medical examiner in New York City ruled the death a suicide. Buffett has donated Berkshire Stock worth more than $47.5 billion to the Gates Foundation.
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Rate outlook is clouded by inflation fears and gold falls as tensions in the Middle East fuel inflation concerns
Gold prices fell on Wednesday as escalating tensions continued to?stoke inflation concerns, reinforcing the expectation of higher U.S. rates. Spot gold dropped 0.6% at $4,030.50 an ounce as of 1130 GMT. Tuesday, prices had risen more than 2% after weak U.S. inflation figures. U.S. Gold Futures for August?delivery fell 0.8% to $4.036.20. The Islamic Revolutionary Guard Corps of Iran has threatened to shut all export?corridors that benefit Washington after Tehran closed the Strait of Hormuz, and the U.S. reimposed its?naval blocade of Iranian port. After closing Tuesday at an all-time high, oil prices have risen. UBS analyst Giovanni Staunovo stated that "higher U.S. oil, gasoline, and diesel prices are likely to result in higher inflation numbers for the next print in August. This could keep some Fed officials' tone on the hawkish, which does not help gold." Staunovo said that "in the near term, oil and gasoline prices in the U.S. will continue to affect gold as it is a major driver of U.S. Inflation." Gold is affected by higher interest rates, which increase the cost of owning the asset. Fed Chair Kevin 'Warsh' told lawmakers that the central bank has "no tolerance" for "persistently high inflation," hinting at the CPI data not being all that swell. According to the CME FedWatch Tool, traders have priced in a 61% chance of a September rate hike. Investors are now awaiting the U.S. Producer Price Index due at 1230 GMT?Wednesday to gain insight into inflation levels and the outlook for monetary policy. Silver spot fell 1.1%, to $57.96 an ounce, and platinum dropped 0.84%, to $1,617.97. Palladium fell 1.2% to $1289.45 after rising 5% the previous session. (Reporting by Sukanya Mitra in Bengaluru; Editing by Diti Pujara)
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Copper prices fall on the back of weak Chinese data but losses are capped by concerns about supply
Copper prices fell on Wednesday, despite disappointing economic data from China's top metals consumer. However, supply concerns due to mine disruptions and the Middle East conflict helped to limit losses. The benchmark three-month copper price on the London Metal Exchange fell 0.2%, to $13,610 per metric ton at 0945 GMT. It had reached a three week high in the previous session. Official data revealed that the GDP growth of China, the second largest economy in world, has slowed to a low of 3.5 years, due to weak domestic demand. Ole Hansen is the head of commodity strategy for Saxo Bank, a Copenhagen-based bank. Hansen said that the downside of the market was limited, in part due to persistent supply problems. The Shanghai Futures Exchange's most traded copper contract pared earlier gains and ticked 0.1% higher, to 104 220 yuan (15,392.11) per ton. Rio Tinto reported a 7% drop in copper production for the quarter ending June. The company said that a furnace failure at its U.S. Kennecott Mine will affect production during the second half. Hansen said, "We continue to be reminded of the potential risks on the supply-side and the high prices for energy will just increase the focus on electricification." The oil prices rose by another 2% on Tuesday after the U.S. reinstated a naval embargo on all Iranian ports, and Iran threatened to close other export routes. Hansen stated that "the long-term bullish'story for copper has most definitely not been negatively affected by the events in the last few months." Other metals include?LME Aluminium, which fell by 0.5% to $3.160 per ton. Zinc also dropped by 1%, to $3.561, while lead was down 0.6% at $1.855. Nickel was down 0.2% at $16,740, and tin lost 0.9%, to $53,340.
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Germany launches water monitoring system after Rhine drought strikes industry
On Wednesday, Germany launched a national information system to monitor water levels in the country. The aim is to better manage water supplies as climate change puts more pressure on Europe's biggest economy. Thyssenkrupp is forced to cut production due to a drought on the Rhine, highlighting the importance of the new platform. Carsten Schneider, Minister of the Environment, said that "Water is our most precious resource" when he launched the Low Water Information System (NIWIS). Schneider, citing studies, warned that if Germany does not take action, water scarcity will cost it EUR625 billion ($714billion) by 2050 or EUR25billion annually. ECONOMIC IMPACT Schneider stated that Germany has lost 60 billion cubic meters of water in the last?25 years as a result of climate change. He said that water availability is becoming an important factor in business decision-making. The debate over attracting data centres or tech companies is not just about skilled workers and energy anymore, but also about water availability. The NIWIS platform consolidates data from federal and state sources on river levels, soil moisture and groundwater, replacing a patchwork system of regional systems. RHINE DISRUPTION Low Rhine water levels have caused cargo transport to be disrupted. Thyssenkrupp said that on Wednesday it had'slightly reduced blast furnace production because of restricted raw materials supplies and suspended their own barge operations. Water?levels at Kaub near Koblenz in western Germany, were 42 cm (16 inches) high on Tuesday. They are expected to continue falling. The record low of 25 cm was achieved in October 2018. Munich, Germany’s southern metropolis, has implemented water restrictions until 1 August following heatwaves. Violations can result in fines up to EUR50,000. $1 = 0.8754 Euros (Reporting and editing by Rene Wagner and Kirsti Knolle)
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Rate outlook is clouded by inflation fears and gold falls as tensions in the Middle East fuel inflation concerns
Gold prices fell on Wednesday as escalating tensions continued in the Middle East to fuel inflation concerns, thereby reinforcing expectations for higher U.S. rates. Spot gold dropped 0.7%, to $4.027.49 an ounce at 0843 GMT. Prices rose by over 2% on Tuesday to a high of $4100.19 an ounce, after weak U.S. inflation figures. U.S. gold futures for August delivered?slid by 0.9% to $4.035.00. After Iran closed the Strait of Hormuz, and after the U.S. imposed a naval ban on Iranian ports, the Islamic Revolutionary Guard Corps of Iran threatened to shut all export corridors that would benefit Washington. After closing at an all-time high on Tuesday, oil prices have risen. The UBS analyst Giovanni Staunovo said that higher U.S. crude prices, gasoline and diesel will lead to high inflation figures in the next print of August. This could keep some Fed officials' tone on the hawkish, which does not help gold. In the short term, oil and gasoline prices in the U.S. will continue to have an impact on gold. It remains a major driver of U.S. inflation." Staunovo?added. Gold is affected by higher interest rates, which increase the cost of owning the asset. Fed Chair Kevin Warsh said on Tuesday that the central bank has "no tolerance" for persistently high inflation, hinting at the fact that CPI data is not so good. According to the CME FedWatch Tool, traders are pricing in a 59% probability of a rate increase in September. Investors are now awaiting the U.S. Producer Price Index due today at 1230 GMT for?insights on inflation levels and monetary policy outlook. Silver spot fell 0.5%, to $58.314 an ounce, while platinum rose 0.2%, to $1,634.36. Palladium increased 0.8% to $1315.05 after rising 5% the previous session. (Reporting by Sukanya Mitra in Bengaluru; Editing by Diti Pujara)
Dollar drops, gold reaches record high as US prosecutors pursue Powell
Gold reached a new record high on Monday and the dollar as well as Wall Street futures both fell. A criminal investigation into Federal Reserve chair Jerome Powell has stoked fears about the independence and power of the world's largest central bank.
Powell
Slammed
The move was part of President Donald Trump's push to gain greater control over the Fed. For traders, it added to the frenetic start 2026 has seen, with the U.S. already capturing Venezuela's
Nicolas Maduro
Set your sights on
Greenland
. S&P 500 futures and Nasdaq were both down by more than 0.6% before the U.S. open. The VIX "fear gauge" was at its highest level since November, and gold, which investors use as a hedge to protect themselves from both inflation and turmoil, hit $4,600 per ounce.
Bond markets have also priced a slight increase in the likelihood of a short-term U.S. rate cut. The STOXX 600 index in Europe remained close to its record highs, as new peaks were set by the arms market and the Swiss Franc, another safe-haven currency. Also the euro and sterling strengthened on the FX markets.
Lee Hardman, MUFG's Lee Hardman, said that the latest development marked a significant escalation of the fight between President Trump & Fed Chair Powell. He added that "the repeated assaults on the Fed's independent" continue to pose downside risk for the dollar.
Fed funds futures added about three basis point more in cuts in this year. This is small, but points out the risk of the Fed being pushed to be more aggressive.
Silver's 5% increase was also accompanied by gold's 1.5% rise. The rising geopolitical tensions surrounding Iran also boosted the market. Oil prices fell as commodity traders did not show any immediate panic. This was especially true with the possibility of Venezuelan crude entering the market. Trump said that he is weighing up a variety of options, including military ones, in response to the violent crackdown of Iranian protests, which are one of the most significant challenges to the country's ruling clerics since the 1979 Islamic Revolution. Abbas Araqchi, Iran's foreign minister, said in an English translation on Monday that the situation is "under control". Brent crude futures fell around 50 cents to just below $63 per barrel. U.S. West Texas Intermediate crude crude, however, was down 45 cents at $58.60.
The clerical establishment in Iran intensified its crackdown against the protests, and both benchmarks increased by more than 3%.
Saul Kavonic is the head of MST Marquee's energy research. He said that while oil prices have increased in recent days, they are still underestimating risk, given the possibility of a wider conflict affecting the Strait of Hormuz.
He added that "the market is asking for disruptions in supply before it responds materially."
TRUMP VS POWELL
Bank shares were the main cause of the drop in Wall Street Futures. Trump also put the Fed in the crosshairs by calling late Friday for an
One-year cap
On January 20, interest rates on credit cards will be 10%.
Citigroup, JPMorgan Chase, and Bank of America dropped between 2.5% to 4% during premarket trading. American Express lost nearly 5% while consumer finance companies Synchrony and Capital One fell over 10%.
For traders, the second week of 2018 will be dominated by U.S. inflation figures, Chinese trade data and a number of U.S. earnings, starting with JPMorgan on Tuesday. Fed chief Powell responded to Trump's threat to indict by saying it was a "pretext". This was to pressure the central bank into cutting interest rates.
Powell's term as chair ends in May. In a statement, Powell said that "this unprecedented action must be seen within the context of the Administration's threats and continued pressure." Economists say the latest developments represent a dramatic escalation of the fight between Powell, who was appointed chair by Trump in 2018, and Powell.
Andrew Lilley is the chief rates strategist for Barrenjoey Investment Bank, a Sydney-based investment bank.
Investors will not be pleased, but this shows that Trump has no other levers at his disposal. The majority of FOMC will keep the cash rate at what they want it to be.
Even against currencies that are typically considered risky, such as the Australian and New Zealand dollar, the dollar's reaction was the most dramatic. The dollar index fell 0.4% in Europe, and is on course for its largest one-day decline since mid-December.
The greenback suffered a terrible 2025. It dropped more than 9% compared to major peers as interest rates differentials shrank as the Fed lowered rates, and concerns about U.S. budget deficits and political unrest swirled.
Ray Attrill, head of currency strategy at National Australia Bank, said: "This open war between the Fed and U.S. Administration... is clearly not good for the U.S. Dollar."
(source: Reuters)