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Gold continues to rise on the back of a weaker dollar, but Iran remains in focus
The 'U.S. dollar' fell, and gold rose for the fourth?straight?session? to a?peak? of nearly two weeks on Wednesday. Dollar?slid, as traders focused on the Middle East war and its implications for the global monetary policies. Gold spot was up 1.3% at $4,728.75 an ounce by 1300 GMT after reaching its highest level since the 19th of March earlier in session. U.S. Gold Futures rose 1.7% to $4.755.70. The U.S. dollar fell for the second day in a row, making bullion priced in greenbacks more appealing to holders of foreign currencies. Bob Haberkorn is a senior market analyst at RJO Futures. He said that if the U.S. dollar continues to fall, gold prices could rise above $5,000 an ounce. Rate-cutting expectations may creep back into the market. He added that the focus was on Iran and Strait of Hormuz - "how this conflict develops and what the future looks like." U.S. president Donald Trump stated in a Truth Social posting that Iran's new leader has asked for a ceasefire from the U.S. "We will reconsider when the Hormuz Strait opens, is free and clear." "We are blasting Iran to oblivion until then," he said. Spot gold dropped more than 11% during March, as the Iran war and higher energy prices stoked inflation fears. This led to a reduction in expectations of looser monetary policies. Bullion is often seen as a safe haven during times of geopolitical unrest and inflation. However, high interest rates can reduce the appeal of this non-yielding material. The end of the conflict may prove to be a double-edged blade (for gold). Tony Sycamore, IG's market analyst, said that a lasting peace accord would eliminate the geopolitical safe haven bid which supported gold prices prior to the conflict. Sycamore said that lower oil prices and an easing of inflation could also revive expectations for Fed cuts in 2026. The ADP's National Employment Report showed that private payrolls in the United States increased steadily during March. Retail sales in the U.S. rose strongly in February. However, the rising gasoline prices caused by the war may have an impact on spending in the coming months. Spot silver dropped 0.5% per ounce to $74.70, platinum fell 0.3% to 1,942.80, and palladium eased by 0.8% to 1,464.88. (Reporting and editing by Paul Simao in Bengaluru, Ashitha Shivaprasad from Bengaluru)
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Argentina delays fuel tax increases in order to reduce the impact of global prices pressures
In a Wednesday decree, the Argentine government announced that it would delay the implementation of tax increases scheduled for liquid fuels, carbon dioxide and other pollutants. This was done in response to the global instability brought about by the U.S./Israeli war on Iran. The decree stated that the move was intended to "support economic growth by sustainable fiscal measures". The decree also stated that the measure would delay the anticipated?tax increase on liquid fuels, carbon dioxide, and other gases for a month, to the end of April. The decree added that this is the second step taken by President Javier Milei in recent days to combat the 'energy price disruptions' caused by the conflict. On?Friday the government relaxed some gasoline quality standards. Local refiners can now blend up to 15 percent ethanol in gasoline to reduce their dependence on petroleum. Analysts warn that rising fuel prices could affect consumer and transport prices. Official data show that Argentina's inflation rate remained stable in February but was still?above expectation due to sharp increases in housing prices, including rent and utility costs. Private analysts had already increased their 'inflation forecasts' for 2026 prior to a surge in crude oil prices late February. Regional Responses Other countries in Latin America are also taking steps to deal with the uncertainty caused by the conflict in the Middle East. Colombia's policymakers raised the benchmark interest rate by 100 basis points on Tuesday to combat inflationary pressures. Chile's central banks minutes show that they briefly considered raising interest rates during their March meeting, whereas Mexico has reached an agreement with gas stations to limit fuel costs, according to the President Claudia Sheinbaum.
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Are central banks selling Treasuries to the public? McGeever
Are central banks selling Treasuries in the midst of the controversial U.S. war in "the Middle East"? It's likely yes, but the situation is complex. The foreign Treasuries in the custody of the New York Federal Reserve have just fallen to their lowest level in 16 years, below $3 trillion. This indicates that foreign central banks are dumping assets at a 'increasingly fast pace. The decline in Fed "custody' holdings, as I wrote last Monday, has been eye-catching. Deutsche Bank strategists estimate the $75 billion drop in the four-week period ending March 19, pointed to $60 billion net selling by central bankers. This would be some of the most aggressive sales ever. The official U.S. Treasury International Capital figures - which are the gold standard data for foreign holdings in U.S. Treasuries – show that central bank sales abroad were minimal last year, but that net purchases were the highest in 13 years in January. What is it then? Selling or shifting? Fed custody data can be a good proxy for foreign central bankers and their treasuries but it is not perfect. The vast majority of the custody holdings are foreign central banks, but they also include quasi-official agencies like sovereign wealth funds or multilateral agencies. Fed custody changes don't always reflect the amount or if central banks are actually buying or selling. Custody holdings, for example, fell by $238 billion in the last year. This suggests central banks are dumping U.S. debt at a breakneck pace. Official TIC data revealed that the net sales by foreign central banks of Treasury notes and bonds last year were only $34 billion. This is less than 1% of the $3.5 trillion in their vault. How can we square this? Changes in exchange rates and bond prices can explain changes in custody data. Some of the "selling", however, can be explained by central banks moving their holdings from U.S. jurisdictions to other parts of their network or non-U.S. jurisdictions. Brad Setser, of the Council on Foreign Relations, has long argued that the recent decline of China's holdings in Treasuries is due to the fact Beijing has funneled vast amounts of foreign assets into its state-owned banks. China's actual holdings are likely to be much higher than what the official figures suggest. Footprints shrinking at nominal highs The official TIC data will be released in May, and we'll know if central banks sold in March. The decline in custody holdings and the weak foreign demand for recent Treasury auctions as well as the falling bond prices suggest that they did. It's still worth remembering that the latest official TIC data, released in mid-March, showed that foreign central bank bought a total of $50.6 billion in Treasuries during January. It was a rare instance where the official demand was higher than private-sector demands. This was also the second largest monthly purchase by central banks in 13 years. In recent years, the private sector has been an important buyer of U.S. In recent years, investors have been a major buyer of?U.S. Treasuries. Foreign ownership of Treasuries is at an all-time high. In the last year, foreign investors owned $9.23 trillion in U.S. government bonds, including $7.78 trillion in bonds and notes and $1.45 billion of bills. All of these are record highs. As a percentage of all Treasuries, foreign ownership has been declining. Morgan Stanley analysts claim that in the fourth quarter last year it dropped to 32%. This is the lowest level since 1997. Central?banks likely sell Treasuries at a margin, not in large?size. It's not yet. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Preliminary data indicates that South Africa's tax revenue increased by 8% in the last fiscal year
Preliminary figures released on Wednesday showed that South Africa collected net tax of 2.01 trillion Rand ($119.73 Billion) in the fiscal period that ended on March 31. This was 8.4% more than the previous year. SARS (South African Revenue Service) reported that the amount collected was 24 billion rands higher than the budgeted amount for 2025. In a statement, the agency stated that the increased collection reflected its focus of compliance initiatives, improved efficiencies?and contribution from the mining sector. The statement said that "these results were achieved despite the challenges of a sluggish economic, geopolitical conflicts, global supply-chain interruptions, and proliferation of the illegal economy." Edward Kieswetter, SARS commissioner, said at a press briefing that the mining sector contributed about 5 billion dollars of the 24.7 billion collected. SARS expects to collect about 2,13 trillion rand for the fiscal year 2026/27, which begins on April 1. This represents a 5.8% rise. SARS stated that South Africa's trade was very minimal with Israel and Iran, but shipping disruptions in the Strait of Hormuz might have a major impact on imports of petroleum products. A presentation showed that more than 70% of the refined petroleum imported in 2025 would come from the Middle East. Oman (26%) and Saudi Arabia (16%) are the countries that send the most refined petroleum to South Africa. The United Arab Emirates (15%) is also a top exporter. Johnstone Makhubu, Deputy Commissioner of Customs in Oman, said that imports were not at risk because the country is located at the exit of the Strait of Hormuz. Nigeria and Angola accounted for more than half of South Africa's crude imports in the past year.
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Retail sales in the US increased by a solid amount in February
Retail sales in the U.S. increased in February, as motor vehicle purchases rebounded. Temperatures also warmed. However, rising gasoline prices due to the war in the Middle East may?cripple spending in upcoming months. The Commerce Department's Census Bureau reported on Wednesday that retail?sales increased 0.6% following a 0.1% decline in January. The economists polled had predicted that retail sales (which are mainly goods and not adjusted for inflation) would rise 0.5% following a 0.2% decline in January. After the government shutdown last year, the?Census Bureau has yet to release data. U.S./Israeli conflict with Iran pushed global oil prices up more than?50%. The national average retail price of gasoline topped $4 a gallon for the first time in over three years. Some worry that rising gasoline prices could reduce the expected boost in consumer spending and overall economic growth from tax reductions. The conflict that lasted a month has also?reduced the household net worth. In March, both the S&P 500 and Dow Jones Industrial Average posted their largest?monthly drop in a very long time. Wealthier households are driving consumer spending. Retail sales, excluding automobiles and gasoline, building supplies, food, and other services, increased by 0.5% in February, after increasing by 0.2% in January. These core retail sales are the closest to the consumer spending component in gross domestic product. Consumer spending declined in the fourth quarter. This helped to slow GDP growth down to 0.7% on an annualized basis. The third quarter saw the economy grow at a rate of 4.4%. (Reporting and editing by Chizu Nomiyama; Lucia Mutikani)
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Copper reaches two-week high amid hopes of a quick end to the Iran war
The copper price rose on Wednesday, reaching its highest level in the past two weeks amid hopes that the Iran war may be nearing an end. Open-outcry official trading on the London Metal Exchange saw benchmark three-month copper rise 0.2% to a metric ton of $12,365 after hitting $12,492.50 - its highest level since March 18. This was copper's fourth consecutive session of gains. However, it is still far below the record high of $14,527.50 that was reached on January 29, 2017. Ole Hansen is the head of commodity strategy for Saxo Bank, Copenhagen. "The market wants us to believe we are getting closer to a resolution to this escalation even though economic clouds still hang over?the?markets, which are grey and could worsen," he said. After President Donald Trump announced that the end of the war against Iran may be near, copper prices rose along with other financial markets. The most active copper contract at the Shanghai Futures Exchange rose 1.5%, to 97.030 yuan (14,093.57) per tonne, after a jump to 97.250 yuan, the highest price since March 19. The metals market also received a boost on Wednesday from data showing that the manufacturing sector of China, the world's largest consumer of metals, expanded for a 4th consecutive month in March. This came after an official survey showed that activity had grown at the fastest rate in a whole year. The physical demand for copper is increasing as evidenced by the higher premiums and declining Chinese inventories. Stocks monitored by SHFE The number of tons in the market fell for a second week in a row to 359 135 tonnes as of March 27, 2019. Hansen said that this indicates that there was pent up demand, and that lower prices we achieved earlier in the month did prompt some buying. A weaker dollar also helped metals gain. Dollar, which makes commodities backed by greenbacks more affordable to investors who use other currencies. LME Aluminium initially dropped as investors believed that the supply problems from smelters in the Gulf would be resolved if war ended. Prices jumped 1.6% to $3,523 per ton in official activity after a consultant said that one major smelter ceased operations and another was only operating at 30%. Other metals include LME Zinc, which rose 0.4% to $3240 per ton. Lead gained 1.3%, nickel grew 0.7%, and tin increased 2.1%, to $47745.
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Fed's Barkin says households and firms still view oil shocks through a "short term lens"
Tom Barkin, Richmond Federal Reserve Bank president, said that businesses continue to believe high oil prices are only a temporary disruption. There is little evidence yet to suggest they have caused consumers to cut back on their spending or changed public expectations of inflation in an alarming way. Barkin said on Tuesday that he had a "short-term" view of the situation based on his weekly credit card spending data and his conversations with executives on pricing, investments and other topics. "Gas expenditure is up, but other spending looks healthy," said Barkin. Barkin is not voting on interest rate policy for this year. If you think that this will only last for a few weeks, then an additional $10 to $15 won't make a big difference in your lifestyle. If you believe this will last a long period of time, I think that you are more likely to experience a pullback. Fed officials and central banks worldwide have responded to the U.S. Airstrikes on Iran and the subsequent surge in global oil price with equal parts patience and concern. They are concerned that sustained high energy costs could increase inflation, which they are trying to contain. And they're also patient against overreacting, until it's clear how long this conflict will last and what impact the prices may be. At its latest meeting, the Fed held the interest rate policy steady at the current range of 3.50% - 3.75%. Policymakers are still projecting that a quarter point rate reduction will be made by the end the year. The situation is uncertain. The potential for a quick change was evident this week, when Brent crude oil, the benchmark, briefly reached $119 per barrel, which is more than 70% above the price before the U.S. began bombing. It then dropped to $102 per barrel after President Donald Trump said that the U.S. war campaign could be coming to an end. He will address the nation on Wednesday night. According to AAA, gas prices jumped on Wednesday, reaching a national median of $4.06 - the highest level since summer 2022 when a combination?of supply shocks from the pandemic era and strong consumer demand caused the 'worst inflation surge in 40 years. Fed officials want to avoid a repeat. The oil boom prompted some investors to believe that the Fed will begin raising interest rates in this year, rather than resuming rate reductions as was expected. Barkin said that there are many scenarios that can push the Fed either way at this time, but he believes that a rise of inflation expectations would be the most likely to cause a rate hike. He said that the hike would be based on inflation expectations finally moving. "I do not have the impression that they are breaking out at this stage." In contrast, the case for rate cuts would be either a rapid return of inflation to the Fed's target of 2% from a point or two above it now, OR a weakening job market which required support through rate reductions. Prices are lower for goods than services The employment report due on Friday will be closely watched to determine if February's job losses were an anomaly, or a sign that weakness was developing. In the absence of this, the Fed could be 'left on hold', and inflation is expected to only make a halting advance towards the central banks target in 2018. This is due to the successive price shocks that Trump has brought about, starting with the tariffs, then continuing with the oil. Barkin, in his discussions with executives, said he has seen a growing split between the goods sector where retailers believe their pricing power is being?limited by consumers' pushback, and the services sector where firms catering to more affluent households feel freer to increase prices. He said that after talking to a retailer who focuses on customers with low-to-moderate incomes, "I got the feeling that consumers were exhausted by price hikes." "They are pushing back." "I walked out with a lens that 1%-2% (of price hikes) would be about the amount they could handle." He said that the?vulnerability was more on the service side, and in particular selling to high-end clients. Barkin stated that "goods suppliers have been through this drill many times, trying to pass along tariffs and oil shock costs. They just feel they don't have much left," Barkin. "I do not have the same feeling about services." Barkin believes that the Fed will likely take a longer time to reach its inflation target. This is reflected in the market's expectations, which no longer include rate hikes. "I see a gradual path, not a quick path. It's just my instinct. Reporting by Howard Schneider, Editing by Dan Burns & Chizu Nomiyama
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SpaceX is seen as a test that will determine whether mega-IPOs succeed or fail
Elon Musk's SpaceX may be the answer to the global IPO market's long-term struggle. Saudi Aramco was the last company to have a IPO at a valuation of over one trillion dollars in 2019. SpaceX, with its "over-trillion-dollar valuation", CEO who has a cult following in retail and exposure to a fast-growing industry is what the IPO'market" has been looking for to end a long-term drought of mega-deals. Investors' appetite for such a large?listing? is still uncertain. Analysts and experts say that the company's success is unique, so it could only have a limited impact on the broader market sentiment. Brian Jacobsen is the chief economist at Annex Wealth Management. Here are a few charts that show the market's current status and SpaceX IPO's potential: WORLD'S BIGGEST IPO ON THE HORIZON The rocket startup has confidentially filed for a blockbuster listing, looking to?raise $50 billion or more, which could value it at $1.75 trillion, potentially dethroning oil giant Saudi Aramco as the world’s largest IPO. Here are some charts showing the current market status and SpaceX's IPO potential: Samuel Kerr is the global head of equity markets at Mergermarket. He said that SpaceX would be the largest IPO ever, based on the size being discussed. It will be a test of public market capacity in a period of real turmoil. SpaceX is probably the only business that can list on this market given all of the hype. PIVOTAL TESTING SpaceX's listing may serve as a?bellwether for IPOs. A positive?reception could indicate that the long-awaited recovery of big-ticket deals has finally begun. Issuers waited for years as markets were volatile, driven by inflation fears, rising interest rates and geopolitical tensions. Industry hopes that 2026 will see a resurgence of market debuts. Kat Liu is vice president of IPOX, a research firm that specializes in IPOs. It would show that the public markets are able to accept large, high-value offerings and help validate pricing in late-stage private markets. TRILLION DOLLAR CLUB Several high profile startups, such as SpaceX, ChatGPT maker OpenAI, and TikTok owner ByteDance have blurred lines between public and private companies with valuations that are comparable to those of the top-tier S&P500 firms. SpaceX will join the ranks of "mega-cap giants" such as Microsoft, Apple and Google that attract the majority of retail and institutional investors. Elon Musk announced?in February? that SpaceX acquired his artificial intelligence startup xAI, in a deal of unprecedented proportions. SpaceX was valued at $1 trillion, and xAI, at $250 billion. This is what a report citing a reliable source said. The recent xAI integration allows Musk to combine launch, Starlink and AI?into a scarce, mega story which can support a higher valuation than what the businesses could achieve individually," said Minmo Gahng assistant professor of Finance at Cornell University. SpaceX reported that it generated an $8 billion profit last year on revenues between $15 billion and $16 billion, according to a January report citing sources familiar with the issue. The equities benchmark has been underperforming the index tracking major listings over the last 12 months. Analysts believe that a successful SpaceX launch could help reopen a window for large and long-delayed listing, especially in capital-intensive industries which have struggled to find investors on the public markets. Some have a more conservative view of the market's future. Kerr, from Mergermarket, said that "(SpaceX could) take up so many capacity that other mega issues might decide to wait and not test the same window."
Dollar drops as gold nears 2-week-high amid hopes of an end to the Iran war
On Wednesday, gold was near a two-week-high - after a month that saw its largest monthly loss for nearly 17 years. The U.S. Dollar and Treasury yields fell on signs of a de-escalation of the war against Iran.
Gold spot was up 1.8% to $4,755.50 an ounce at 1159 GMT after rising by 2% earlier, reaching its highest level since the 19th of March. U.S. gold futures for delivery in April rose 2.3% to $4.783.50.
Donald Trump, the U.S. president and Marco Rubio, the Secretary of State of the United States have both said that the end of war against Iran is near. This could mean direct talks with Tehran or a winding-down of the conflict without a deal.
Trump will give an update on Iran at 9pm EDT on Tuesday (0100 GMT Thursday).
"We have seen a positive reaction to another Donald Trump statement... The U.S. Dollar Index has weakened, and the euro is stronger against the dollar. Futures for bonds and interest rate cuts are also up, which indicates that the opportunity cost to hold gold has decreased," said Quantitative commodity Research analyst Peter Fertig.
Gold priced in greenbacks is now less expensive for those who hold other currencies. Benchmark yields on 10-year U.S. Treasury notes fell to a two-week low.
Gold prices fell by more than 11% during March, the steepest monthly drop since October 2008. The surge in oil prices has fueled inflation concerns.
Gold is often used to hedge inflation and geopolitical risk, but expectations of a hawkish response from the monetary authorities have made non-yielding gold 'less attractive' among investors.
Fertig said that the market has shifted its narrative on gold as a safe-haven at times. If it's more about inflation, then both gold and equities could suffer because the markets fear central banks will be forced to halt interest rates in the Fed case.
Palladium rose 0.6% to $1,485.45, while platinum rose 1.4% to $1976.82. (Reporting by Ishaan Arora in Bengaluru; Editing by Arun Koyyur)
(source: Reuters)