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Gold prices rise as inflation pressure is reduced by the soft US employment report
Gold prices remained nearly unchanged despite hitting a six month low on Thursday. This was due to a weak U.S. employment report, which offset the pressure of strong inflation data. It also increased expectations for higher interest rates in advance of the Federal Reserve meeting next week. At 11:27 am, spot gold was unchanged at $4.081.99 an ounce. ET (1527 GMT), having hit its lowest level since late November during the earlier session. U.S. gold futures for August were down 0.7% to $4,103.60. Data revealed that U.S. Weekly Jobless Claims?rose to 22,99,000 for the week ending June 6, exceeding expectations of 219,000. David Meger of High Ridge Futures, director of metals and trading, said that a weaker job market would support gold prices. He added that "we have seen?inflationary pressures increase both yesterday and today; the potential for higher interest rates has supported the dollar and pushed the gold market." U.S. producer price increases were higher than expected in May. Data on Wednesday also showed that U.S. consumer prices rose at their fastest rate in three years in the month. Since the U.S. and Israel war against Iran began in late February, spot gold has been under pressure as rising oil costs fuel expectations of high interest rates for a prolonged period. Gold is often viewed as a hedge to inflation but higher interest rates can weigh down on the metal. Investors are awaiting the Fed meeting next week, Kevin Warsh's inaugural as chairman. Rates are expected to remain unchanged. According to CME Group's FedWatch, traders are currently pricing in a 69% probability of an increase in the U.S. interest rate by?December. The U.S. and Iran exchanged air strikes on the geopolitical scene, with President Donald Trump threatening further strikes if Tehran did not agree to an immediate 'peace deal. Iranian sources claim that talks have intensified on a preliminary agreement. Silver spot rose 0.5%, to $64.04 an ounce. Platinum gained 0.6%, to $1674.76. Palladium rose 3.1%, to $1252.99. (Reporting and editing by Jonathan Ananda in Bengaluru, Anushree mukherjee in Bengaluru, Noel John)
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The US military would be at risk if they were to take Kharg Island
Donald Trump stated on Thursday that he wanted to seize Kharg Island, the?Iran oil infrastructure hub. Analysts believe the U.S. could seize the Island 'quickly', but that the move would put U.S. soldiers in danger and could prolong the war rather than shorten it. Where is Kharg Island and why is it important? Kharg Island is located in the northern Gulf about 400 km (483 miles) north of the Strait of Hormuz. It is located in water that is deep enough for tankers to dock, even if they are too big to reach the shallow waters of the Iranian coast. Before the start of the war on February 28, 90% of Iran's oil was exported from this island. Seizing the island would disrupt Iran's oil trade and put enormous pressure on Tehran. Iran is the third-largest producer of oil in the Organization of Petroleum Exporting Countries. What is the'state of play? U.S. forces conducted strikes against Kharg between March and April. Trump claimed that they had "totally destroyed" all military targets and suggested they could target the oil infrastructure next. U.S. officials said at the time that the administration was considering whether or not to send ground troops to the island. Kharg hasn't been attacked since then, but the United States continues to blockade Iranian ports and has targeted oil tanks near the island. Trump said on Thursday that he would "like" to take over the oil hub but did not give any specific plans. "My preference was always to take Kharg Island... that's my preference." "I don't think America can stomach it," he said to Fox News. The war has already severely reduced Iran's oil exports. CAMERA-WIRING DRONES Experts said that U.S. forces could seize the island fairly quickly. However, this would not necessarily result in a swift and decisive ending to the war. In March, Ryan Brobst and Cameron McMillan from the Foundation for the Defense of Democracies stated that a seizure or occupation of Kharg Island would be more likely to escalate and prolong the war rather than to bring about a decisive victory. They claimed that U.S. soldiers would be subjected to missiles and drone attacks. This could include "first-person-view drones", which are used by millions of people in Ukraine. They said that if the Iranian regime were to launch a successful attack, they would release online videos showing the deaths of American soldiers. TROOPS WILL NEED BACKUP Former commander of U.S. Central Command Joseph Votel told TWZ.com that 'while only 800-1,000 troops will be needed to hold Kharg Island they would also need logistical support and protection. Votel stated that the troops would be vulnerable and he doubted if capturing the island would give any tactical advantage. He called it "odd", but the U.S. would do it if necessary. (Reporting and editing by Andy Sullivan and William Maclean; reporting by David Brunnstrom)
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Dollarama's sales continue to grow, topping quarterly estimates
Dollarama, a discount retailer in Canada, beat its quarterly profit and sales estimates on Thursday. Cost-conscious shoppers sought out Dollarama for low-cost essentials. Its shares rose 7% at the start of trading. The high cost of gasoline linked to the Middle East war has put pressure on household budgets. Walmart, Target and Dollar Tree, as well as Dollar General, Dollar Tree, and other discount retailers in the United States have flagged a cautious environment for spending over the past few weeks. Dollarama also forecast a 3%-4% growth in comparable sales for the year. CEO Neil Rossy said: "We expect that our strong value proposition will continue to resonate with customers." The Reject Shop, a discount chain in Australia, was purchased by the company to expand their business outside of Canada. The company also operates in Mexico via its Dollarcity subsidiary which continues to grow. Brian Morrison, TD Cowen's analyst, said: "Progress in Mexico and Australia confirms our?view that the business model can be portable and they are the next engines for outsized growth." Dollarama reported net sales of C$1.85 ($1.32 'billion) in the?first three months, compared to analysts' estimates of C$1.82?billion, according to LSEG data. It reported quarterly earnings of C$302.3 millions, or C$1.11 per?share for the three months ending May 3. This compares to C$273.8million, or C$98 Canadian cents, per?share from a year earlier. The company's earnings were C$1.05 on a?adjusted base, compared with the expected 99 Canadian cents. (1 Canadian dollar = 1.3981 dollars) (Reporting and editing by Vijay Kishore in Bengaluru)
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Gold prices rise as inflation pressure is reduced by the soft US employment report
After hitting a six month low on?Thursday?, gold prices remained largely?stable? as the strong inflation data offset the pressure of a weak U.S. jobs survey. This also increased expectations for higher interest rates in advance of next week?s Federal Reserve meeting. At 9:17 am, spot gold was unchanged at $4.076.88 an ounce. ET (1317 GMT), having hit its lowest level since November 21, earlier in the session. U.S. gold for August delivery was down 0.9% to $4,097.10. The data showed that U.S. Weekly Jobless Claims? rose to 229,000 in the week ending June 6, exceeding expectations of 219,000. David Meger of High Ridge Futures, director of metals and trading, said that a weaker job market would support gold prices. He added that "we have seen?inflationary pressures continuing to rise, both yesterday and today; the potential for higher rates has supported the dollar and pressed the gold market." U.S. producer price increases were higher than expected in May. Data on Wednesday also showed that U.S. consumer prices rose at their fastest rate in three years in the month. This was boosted by surging energy prices. Since the U.S. and Israel war against Iran began in late February, spot gold has been under pressure as rising oil prices fuel expectation of long-term high interest rates. Gold is seen as a hedge against rising inflation but higher interest rates can weigh down the metal. Investors await the Fed meeting next week, Kevin Warsh's inaugural as chairman. Rates are expected to remain unchanged. According to CME Group's FedWatch, traders currently "price" a 69% probability of an increase in the U.S. interest rate by December. The U.S. and Iran have traded air strikes on the geopolitical scene, with President Donald Trump threatening further strikes if Tehran does not immediately agree to a 'peace pact. Iranian sources say that talks have intensified on a preliminary agreement. Silver fell by 0.3% per ounce to $63.52, platinum rose 0.4% to 1,670.85 dollars, and palladium increased 1.7% to $1236.58. (Reporting and editing by Thomas Derpinghaus, Jonathan Ananda and Noel John from Bengaluru)
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Mukesh Ambani's Reliance Group enters Mumbai slum redevelopment sector
Reliance Group, owned by Indian billionaire Mukesh Ambani, has won the bid to redevelop Dharavi, a slum of 101.4 acres in western Mumbai. This is its first entry into a market where Adani Group, a rival, is already redeveloping Dharavi, one of Asia's largest slums. The Mumbai-based Slum Rehabilitaion Authority announced late Wednesday that a consortium led by Reliance 4IR Real Estate?Private Limited won the bid to develop the Juhu Galli cluster of slums in Andheri. It said that the project will deliver over 28,000 homes of rehabilitation for those who are eligible and currently live in Juhu Galli. JSW Group, a metals giant, and Shapoorji Pallonji Group also submitted bids. Slum rehabilitation in Mumbai was traditionally handled by mid-sized developers working under the Slum Rehabilitation Authority. Projects were often delayed due to fragmented landholdings or the need to obtain consent from residents. Maharashtra, which is under the Bhartiya Janata Party of Prime Minister Narendra modi, has made policy changes in recent years that have brought large conglomerates into the sector. In November 2025 the?state announced the new framework for redevelopment of slum clusters, which allows developers to develop large contiguous lands of at least fifty acres without the need of consent from residents. Developers can also benefit from higher building limits and additional rights to develop, allowing them to create more space for sale once the slums are redeveloped. Reliance must pay 7 billion rupees (73 million dollars) to the Slum Rehabilitation Authority over the next two years in order to cover the temporary rents of the residents. The authority also said that it must?deposit an additional?one-year of temporary rent costs, and a performance warranty of 1 billion rupees (about $10 million) to cover the residents' temporary rentals. The Slum Rehabilitation Authority stated that "the successful bidding process shows the growing interest among India's top corporate houses to partner with the government in order to tackle Mumbai's housing issues through large-scale redevelopment projects." Adani Group was awarded the contract to transform the Dharavi Slum in Mumbai by 2023. However, the project has been plagued with legal issues, and residents have protested. (Reporting and editing by Susan Fenton; Dhwani Paandya)
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ROI-Red-hot SpaceX IPO may burn retail buyers: McGeever
The media frenzy around Elon Musk's SpaceX's public listing is raging. This poses a serious risk to investors, especially retail investors. In a large initial public offering (IPO), the share allocation to small investors is typically less than 10%. Large institutional investors are left with the majority of newly listed shares. This is a good thing for small investors, as a new launch can be a flop during the first few days of trading or highly volatile in weeks and months to come. Large institutions have deep pockets and the ability to tolerate market volatility. They also have a high threshold for loss. Retail investors cannot expect to experience the same level of risk. SpaceX's IPO is not typical, and it's not just the $1.75 trillion valuation. Retail investors will receive around 30% of $75 billion worth of shares. This leaves people more vulnerable to price volatility and volatility than normal. RED FLAGS There has never been a better time for individuals to participate in a major IPO. Fidelity Investments took the unprecedented step of lowering their eligibility requirements for participating in an IPO, from $500,000 to only $2,000. Robinhood Markets clients, SoFi customers, and E*Trade clients are not required to have any money in their account, whereas Charles Schwab requires a minimum of $100,000. Small investors may be lured in. Retail flows tracker Vanda Research reports that the usual increase in equity purchases after U.S. Tax returns in April was tepid. This could be because some investors were raising liquidity in anticipation of the SpaceX IPO. Retail investors should be wary of large tech IPOs. Sam Grelck is an equity strategy analyst with Truist Advisory services. He has tracked 30 tech-related IPOs in the last 15 years. His findings indicate that a significant drop within SpaceX?s first year of trading is highly probable. Within 12 months after the first day of trading, shares in each of these 30 companies experienced a double-digit drop. Some of the drawdowns reached as high as 90%, while the average was only 55%. He advises investors to be ready for "elevated volatility" and possible significant drawdowns, when investing in new listings. His findings show, however, that even if the performance is uneven, returns are positive for the first three month following the IPO. The returns over six and twelve months tend to be negative. The ride is always bumpy. BOLD ASSUMSIONS Will SpaceX's ride be smoother? The numbers that support the IPO seem to suggest otherwise. Goldman Sachs, one of the underwriters for the IPO, estimates that by 2030, total revenue will grow from $18.7bn to $474bn, and its AI segment's revenue will increase 100 times to $322bn from $3.2bn. Anthony Saglimbene, Ameriprise's chief market strategist, says: "By any reasonable measure that is a bold assumption." Morgan Stanley analysts, who are also underwriters, have forecast that total revenue will reach $3.4 trillion in 2040. SpaceX waived the requirement that employees wait for six months to sell their shares. Analysts warn that early investors and employees could profit from their positions by selling shares to retail investors. A rush of sales from insiders of a company could be met by a wall of?buying?from individual. It might not be, and many retail investors may suffer big losses during a downturn while sophisticated shareholders leave early. At the top? Many analysts warn that, on a broader level, the mania around the SpaceX IPO signals that the?top of the market is now. Of course, not everyone is in agreement. Noah Weisberger is the chief U.S. Equity Strategist at BCA Research. He notes that only 20% of mega IPOs occur during market peaks. The previous mega-IPO wave is nothing compared to what's coming up in the next few months. SpaceX will be launching a monster IPO, followed by AI darlings OpenAI & Anthropic whose offerings are expected to reach $1 trillion valuations. Retail interest in other mega-public?listings is sure to skyrocket if?SpaceX proves a success. If it fails, those who invested their?savings in the largest IPO ever will be searching for shelter. 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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US producer prices rise more than expected in may amid a jump in energy costs
The Middle East conflict has driven up the price of energy products, resulting in a?largest annual gain in three-and-a half years. The Labor Department's Bureau of Labor Statistics announced on Thursday that the?Producer Price Index?for?final Demand?advanced 1.1%?last month?after a downwardly-revised 1.1% surge in March. The economists polled had predicted the PPI would rise 0.7%, after an earlier reported 1.4% increase in April. The PPI rose 6.5% in the year to May, which is the highest increase since November 2022. Nearly 80% of PPI's rise was due to a 2.8% increase in goods prices, mainly energy products. Prices of?services rose by 0.3%. Fuel prices have risen due to the U.S. and Israeli war against Iran. This includes gasoline and diesel. The Strait of Hormuz shipping restriction has strained global?supply chain, leading to shortages of a variety of goods including fertilizers and aluminum. On Wednesday, the government announced that consumer prices rose above 4% for the first three-year period. In order to achieve its inflation target of 2%, the U.S. Central Bank tracks Personal Consumption Spending price indexes. Financial markets have priced in an increase of the Federal Reserve's rate due to rising inflation and labor market stability. The bar for tightening policy is high, say economists. They argue that the oil price shock has so far been confined to transportation. At its next meeting, the U.S. Central Bank is expected to maintain its benchmark overnight interest rates in a range of 3.50%-3.75%. The Fed is expected to abandon its easing policy, but economists are not so sure. After the CPI report was released, economists predicted PCE inflation would?increase by 0.4% in may after?rising at the same rate in April. Forecasts for PCE inflation were forecast to rise 4.0% over the 12-month period ending in May. This would be the biggest increase since May 20,23. It had risen 3.8% in April. Reporting by Lucia Mutikani; Editing and proofreading by Andrea Ricci
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KKR creates $10 billion AI Infrastructure Company with Nvidia and Vistra
A KKR led group launched a new 'company' on Thursday with more than 10 billion dollars in?committed?capital to finance the buildout of AI -infrastructure. This is the latest attempt?by a alternative -asset -manager to capitalize on the growing demand for AI-services. Kuwait Investment Authority (KIA), AI chip giant Nvidia, and utility firm Vistra, are all anchor investors in Helix Digital Infrastructure. The company is led by Adam Selipsky, former Amazon Web Services CEO. The surge in U.S. construction of data centers has caused a shortage of electronic components and strain on power supplies, slowing the development of key facilities for Big Tech's AI goals. Private equity is a funding source for this industry because of?the rising costs and the?growing size of projects. Apollo and Blackstone announced on Tuesday that they will finance a $35 Billion expansion of AI capability for Anthropic by using Broadcom's customized chips as part a new partnership. Vistra, a preferred power supplier, will replace Nvidia as the preferred AI datacenter designer. Helix 'can add more institutional investors once the founding 'commitments have been?closed. KKR said that their infrastructure platform, which manages assets worth over $100 billion, includes $70 billion across digital and power. Selipsky stated that "large users of digital infrastructure need to reduce complexity in order to unlock new capacities." He left his position as AWS's chief in May 2024 after having doubled the division's operating profit and sales since he was appointed in 2021. (Reporting by Anhata Rooprai in Bengaluru; Editing by Shilpi Majumdar)
The AI boom and Brittle bonds face off in the morning bid of AMERICAS
The ROI team's weekend reading, viewing and listening.
Mike Dolan is Editor-at-Large for Markets & Finance
Hello Morning Bid readers!
The week began with a new surge in sovereign bonds yields across the globe as the 'Iran energy shock' kept the pressure up on oil prices and inflation expectations, along with rate-hike betting. The risk-off trend took attention away from the AI frenzy and global equities were volatile. However, major indexes rose later in the week led by chipmakers.
Bonds were under renewed pressure as government borrowing costs reached several milestones. The 30-year U.S. Treasury Yields hit a new high this week. Japan's long term borrowing costs have also reached new records - and Britain's gilt rates are at their highest level since the 1990s, as investors worry about a potential change of Prime Minister. Bond?selling slowed down late in the week as gilts were given a reprieve from UK inflation that was below expectations and Andy Burnham's, the mayor of Manchester, who is the main contender to Keir?Starmer's premiership.
The energy crisis showed no signs of abating, but the Gulf situation remained the main aggravating factor for bond yields. Brent crude prices fluctuated throughout the week. Fresh attacks in the area over the weekend pushed Brent crude over $110 per bar on Monday. After reports that six million barrels of oil had been transported by supertankers through the Strait of Hormuz, prices dropped to $105/bbl.
Meanwhile, Trump has continued to pursue his hardball approach: he floated the idea of a new military strike while simultaneously urging Tehran towards a peaceful settlement, and he talked up the prospects for a breakthrough. The oil prices rose again on Thursday after Tehran seemed to be hardening its stance regarding its nuclear program, underlining the distance between the two sides in their negotiations.
Energy markets are in a race against time. Fatih Birol, the IEA's chief executive officer, warned that a crisis was looming as crude oil inventories in the world could reach critical levels if the Strait of Hormuz remains closed. This could indicate that the global oil market is only a few months away from a crisis.
The summer months may be the most difficult for fuel supply disruptions.
The recent ructions in the markets could be a sign of things to come, now that Kevin Warsh is in charge. Markets can no longer assume that the Federal Reserve would always buy bonds when they are in need.
Warsh takes over at a challenging time. Warsh, who is set to be sworn into office at the White House today, was expected to pursue rate reductions once he assumed his position, as per the president's stated wishes. This may not be possible, given the inflation backdrop.
Strangely, Trump appeared to back down from his demand for immediate rate reductions this week. In comments to the Washington Examiner he said he would "let Warsh do what he wants" to rates.
Does that mean that rates are unable to fall as long as the price pressures continue? Fed policymakers seem to be increasingly in agreement. Minutes of its April policy meeting were released on Wednesday and provided more context to the hawkish remarks in last month's statements.
The accelerating inflation in the U.S. has forced real interest rates to negative territory.
This week, the chip giant Nvidia announced its first-quarter earnings. It was one of the most anticipated events of this year's earnings season. The results were strong, but the reaction of the stock price was not as positive. This is a sign that the share price is already reflected in the optimism and the high bar set for the world's largest company to continue to impress markets.
A planned strike by Samsung employees dragged the tech giant down on Wednesday. However, the South Korean chipmaker, after an 11th hour deal, surged to a new record high on Friday, pulling the KOSPI index with it.
Elon Musk filed for SpaceX's long-awaited IPO on Wednesday. It could be the biggest in history. Sources claim that SpaceX could list its shares on the Nasdaq as soon as June 12. OpenAI is also reportedly planning to file an IPO soon, with a listing date of early September. AI rival Anthropic will also be hitting the Street.
Open Interest. For more data-driven insight on markets and commodities. Open Interest. Open Interest.
Why could AI increase the neutral interest rate? What could happen if the status quo changes in the Gulf region threatens the dominance of U.S. dollars? How is it that Australia's LNG industry is both uninvestable, and also the country's "greatest growth opportunity"? What is the story behind zinc's surprising strength? Which countries are the most susceptible to a diesel price squeeze? Why would China bulls be wise to tread lightly? Three key reasons for the continued equity rally
We're reading this weekend... RON BOUSSO. ROI Energy columnist. In his Substack Noahpinion economics columnist Noah Smith argues militaries that do not use drones in'modern warfare' are outdated. He warns that drones made in a day can destroy a whole year's production of tanks from Rheinmetall. It's scary stuff. GAVIN MAGUIRE is the ROI Global Energy Transformation Columnist. A report by the International Renewable Energy Agency shows that the decarbonization of heavy road transport, which was long viewed as a permanent reliance on diesel due to the cost and weight associated with batteries, has become increasingly viable. Things are changing fast. CLYDE RUSSELL: Columnist for ROI Asia Commodities and Energy, former columnist John Kemp, has created a slide deck that provides a clear and comprehensive look at the global impact of the closure of the Strait Of Hormuz on the oil markets. It includes graphical analysis of flows and prices.
We are listening to... Ron Bouso, a?ROI Energy columnist. This podcast from the Oxford Institute for Energy Studies analyzes how oil prices have responded to the?Hormuz Crisis in a volatile and sometimes unexpected manner.
We're keeping an eye on... JAMIE MCGEEVER. In March, Jeff Currie, Carlyle, and Amrita Sen, Energy Aspects, discussed the energy shock caused by the three-week-old Iran War. They reconvene two months later, and are still bearish, despite the Strait of Hormuz being closed. Currie asks: Why is oil at $100 and not $200 if markets are "la-la land"?
Want to receive Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed are the authors'. These opinions do not represent the views of News. News is bound by the Trust Principles to maintain integrity, independence and freedom from bias. (By Mike Dolan).
(source: Reuters)