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Short-covering of gold has led to a rebound from a six-month low; PPI data is the focus
Short-covering helped gold prices bounce back from a six-month-low on Thursday as investors awaited the key U.S. Inflation report, which could shed light on Fed policy outlook. Gold spot rose 0.4% by 215 GMT to $4,089.12 an ounce, after having fallen as low as $4,022.09 per ounce on November 21 earlier in the day. U.S. gold contracts for August delivery fell?0.5% to $4,111.10. "With prices hurtling toward $4,000, there's an obvious support level that could prompt bears to book a profit quickly or tempt battered Bulls from the sidelines," said Matt Simpson, a senior analysts at StoneX. The US dollar index did not gain much following the CPI report on Wednesday. If there are no nasty surprises in the PPI, then gold may be due for a technical rebound over the near term. The Middle East conflict and the surge in energy prices were a major factor in the increase in consumer inflation in May. The markets are now awaiting the May U.S. Producer Price Index, which is due later today, to assess the monetary policy of the Federal Reserve. Gold is often viewed as an inflation hedge, but higher interest rates can weigh down on this non-yielding metal. According to CME FedWatch, traders are pricing in more than 70% of a U.S. interest rate increase by December. The U.S. Military announced on Wednesday that the United States had launched a "fresh round" of strikes overnight against multiple targets in Iran. This comes after Donald Trump promised new attacks if a peace agreement was not reached. The price of oil rose by more than $2 on Thursday after Iran announced?the closing of the Strait of Hormuz in response to the U.S. attacks. Silver spot rose 0.3%, to $63.86 an ounce. Platinum gained 0.6%, to $1673.75, while palladium climbed by 2.2%, to $1239.89. (Reporting by Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu)
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Elliott criticises Australia's Northern Star over board revamp and sales
Elliott Investment Management, an activist investor, called on Australia's biggest gold miner Northern Star Resources late on Wednesday to restore shareholder value immediately by re-evaluating its board and conducting a formal strategic assessment. They cited severe underperformance. Elliott Investment Management, an activist investor, announced last week that it had acquired a stake of more than A$1 Billion ($700.80 M) in Northern Star Resources. The investor cited severe underperformance and repeated "operational mistakes", including seven missed outlooks over the past four years and a share value that was vastly below its peers. Elliott's call, which was instrumental in convincing BHP to end its dual listing campaign after a five year campaign, came as the $19billion miner was recruiting a new chief executive and planning succession for its chair. In a letter sent to shareholders on Wednesday morning, Northern Star responded to Elliott's proposal by saying that it would be happy to work together with the activist investor. The U.S. investor stated: "The letter from the board indicates that they do not understand the magnitude and change required to gain back the trust of shareholders, starting with significantly strengthening the board themselves." Elliott said that the case for a review of Australia's biggest listed gold miner has become clearer since the board released its letter. Northern Star stated in its letter to shareholders that it did not believe it was the right time for a sale. In its shareholder letter, Northern Star acknowledged that several companies had approached it about considering corporate combinations due to the poor performance of its shares. "I believe that Northern Star will act on a number of things Elliott wants it to, but Elliott's pressuring is going to force Northern Star to move faster," said Daniel Morgan, an analyst with Barrenjoey, in Sydney. Morgan stated that Northern Star wants to continue with its most valuable assets, Kalgoorlie Super Pit and the Hemi Pogo projects. Morgan also said that remaining assets could be sold to mid-tier gold miners who are looking to raise cash, starting this year. Northern Star stated in its letter that, over the past six months, investment banks had suggested a spin-off, an option which was also considered by the miner's financial advisor. However, the miner chose not to pursue this option. Northern Star faced several challenges at its Kalgoorlie Gold operations in Western Australia over the past year. It also said that achieving its lower-end production guidance for fiscal 2026 would be difficult. The company's shares fell by as much as 5.3% in the early hours of Thursday to a price of?A$17.55, the lowest level since March 24. They were also in line with the broader S&P/ASX 200 Index, which had fallen 0.8% as at 0038 GMT. Stocks have lost 33% of their value this year, far outpacing the 5% drop in gold.
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Report: Indonesian floods killed at least 7% orangutans, a rare species.
A new report released on Wednesday shows that deadly landslides and floods in Indonesia's Sumatra have killed at least 7% the population of critically endangered tapanuli apes. At least 1,200 people were killed and 300,000 homes damaged by the cyclone-induced floods and landslides. Environmental groups blamed the rapid deforestation on Sumatra for the extent of damage. The report said that at least 58 Tapanuli Orangutans were killed by the floods. These orangutans are native to north Sumatra, in an area called Batang Toru Forest. This forest is also home to the majority of the 800 primates. The report was a joint study of Borneo Futures in Brunei, World Weather Attribution, and Liverpool John Moores University. It did not cover the rest of the forest. This means that the death toll may have been higher. Satellite images of damage to the West Block of Batang Toru, and historical records of orangutan populations in the area were used to derive the findings. The study found that climate change caused by humans has increased extreme rainfall in the Malacca Strait area, which puts the habitat of the Tapanuli Orangutan at greater risk. Erik Meijaard, the lead author, from Borneo Futures said that the heavy rains soaked up the soil to the point where large areas of?hillsides within the primary forest collapsed into fast-moving land slides. He said: "If you are caught as an orangutan... If anything falls at high speeds, your chances of survival will be minimal. So it was a concern." This level of?loss?is substantial for an animal with a very small population. Combining this with other pressures, such as habitat destruction and conflict between humans and wildlife, makes it even more urgent to implement and properly resource a coordinated species action plan. Panut Hadisiswoyo is another researcher who urged the Indonesian Government to work with NGOs and other researchers to "prevent further decline in orangutan population". "We can reduce the poaching and hunting?and then probably stabilise the number," he said. He added that all parties should pay attention to poor land use, which contributes to a declining population. (Reporting and editing by Gibran Pshimam, David Stanway, and Ananda Teresia)
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EU agrees stronger price controls for new carbon market
The European Parliament announced early Thursday that it had agreed to stronger measures to regulate?prices on its new carbon markets, in response to concerns from governments that the initiative to reduce emissions could increase fuel costs. Negotiators from the?EU and the European Parliament agreed that if the price of permits on the new carbon markets exceeds EUR45 ($52), then 40 million permits from the "stability reserves" will be released to the market to regulate the supply. This is an increase from the previous 20 million. Under the Wednesday evening changes, the reserve can be activated twice per year. This means that 80 million additional permits?can be issued each year. The reserve will be extended to 2030 and beyond, rather than ending in that year. The EU's second emission trading system (ETS), which will be implemented in 2028, will place a price on CO2 emissions from heating and transportation fuels. This is to encourage the shift to electric vehicles and more efficient home heating systems. The ETS will require that fuel distributors and suppliers purchase CO2 permits to cover their own emissions. The proceeds from this scheme will go towards helping people to pay their bills, purchase electric cars, and make energy-saving renovations in homes. The new scheme, known as ETS2, will cover heating and transportation emissions separately from the existing EU emissions trading system that covers heavy industry and power plants. ETS2 price regulation is stricter after governments such as France and the Czech Republic warned that it could stoke opposition to climate change policies if perceived to increase fuel prices. The revisions include a more gradual release from the'stability reserve' of market permits, with smaller quantities becoming available as soon as the number of permits falls below 260 millions, rather than releasing 100,000,000 permits all at once once the total drops below 210,000,000, according to the parliament. Before 2028, the agreement must be?adopted by the European Parliament?and?EU member countries?. In July, the European Commission will likely present a more comprehensive review of ETS2.
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China's control of indium phosphide threatens AI data center rollout
Jim Anderson, the CEO of Coherent, a chipmaker backed by Nvidia in an earnings call early in May, warned about a shortage of Indium Phosphide. A U.S. delegation of businessmen accompanied President Donald Trump to China. Three sources with knowledge of the matter said that Anderson's trip was to highlight the delays in China's licensing for the export of the high-speed optical chip needed in the manufacturing of AI data centres. According to two U.S. officials and a person who was briefed about the talks, the issue was also raised during the Seoul talks between the top 'trade negotiators' of the two countries in advance of Trump's summit with China President Xi Jinping on May 14-15. Indium phosphide, or InP as it is commonly known in the industry, has become a powerful weapon that Beijing can use to disrupt the global roll-out of AI data centers. Konrad Wang is a SemiAnalysis research analyst. He said that InP was one of many supply chain bottlenecks that collectively limit AI data center buildouts. InP, a material that is essential to the new data center technology, which uses light via optical fibres or photonics instead of electrical signals transmitted through copper wire, is in high-demand. Nvidia announced in March that it would invest $2 billion each into U.S. companies Coherent, Lumentum and Lumentum Photonics. Custom-chip maker Marvell Technology acquired semiconductor startup Celestial AI to take advantage of its photonics work last year. Export restrictions by China on InP, which began in February 2025 have become a major obstacle?in the race to design fastest and most energy-efficient components?for AI data centres. The Chinese commerce ministry has not responded to a request for comments sent by fax. Beijing's control of InP shows that it is ready to extend its export restrictions on rare earths. These have been disrupting global supply chains for automotive, semiconductors and aviation since last year, as a result of Washington's tariff disputes. Paul Triolo is a partner with Albright Stonebridge Group. It is better to slow down or limit the export of upstream materials, such as metals, compounds and substrates. This will allow the optical-module eco-system to scale rapidly enough to meet hyperscaler demands. According to the U.S. Geological Survey, China will be the top indium producer by 2024. Its production will account for 70% of the global total. RIPPLE EFFECT AXT, which is the second largest InP substrate manufacturer in the world and a major Coherent supplier, said that "InP Export Permits represent the greatest challenge we face at the moment." The company said that its Chinese subsidiary, which manufactures the majority of its InP substrates in China, only received its first permits for export last June, and it has a large backlog of orders. SemiAnalysis Wang stated that "the restrictions ripple throughout the entire optical supply chains" beyond AXT or Coherent. He said that despite a quadrupling of production, Lumentum was sold out until 2028, and optical product makers VPEC, LandMark Optoelectronics, as well as Taiwanese VPEC, were experiencing InP substrate disruptions due to AXT permit delay. Since China introduced export controls on InP, a 6-inch InP Wafer's average price has risen 250% to $5,000. Sources familiar with the situation say that two of the largest U.S. chip manufacturers have asked for assistance with export licenses due to rising costs and disruptions. U.S. firms in the photonics industry are also attempting to manufacture their own InP and source them from non-Chinese sources, such as Japan's Sumitomo Electrical Industries. Analysts said that capacity additions were low and slow. It takes about two to three years for new plants to be brought online. Coherent announced in May that it will double its InP wafer production capacity at its Texas facility this year, and plan to do so again by 2027. AXT Coherent Lumentum VPEC LandMark and LandMark have not responded to requests for comments. LandMark signed a long term InP supply agreement with Sumitomo in April. Sumitomo said that the Chinese InP export controls have not had any effect on its production so far. According to a person familiar with China’s photonic chip sector, Sumitomo consumes most of its InP substratum output internally. This means that the global market is undersupplied. Market leaders?AXT, Sumitomo and JX Advanced Metals together account for nearly 80% of the global InP substrate production. CHINESE COMPETITORS China's export restrictions has created an opportunity for local manufacturers to produce InP substrates. Yunnan Germanium, Guangdong Xiandao, and Zhuhai Dingtai Xinyuan, are the leaders in this field. Many of these Chinese companies are rapidly increasing production capacity. Yunnan Germanium announced in April a 189-million-yuan investment ($28-million) to increase production capacity to 450,000 InP wafers per year. In its 2025 annual report, the company reported that shipments of InP Wafers increased by 74%. Guangdong Xiandao launched a new project through its subsidiary Guangdong Xianrui this year. The company expects to produce 40 tons of InP Crystals per annum, which is the raw material required for substrates. Sources at a Chinese InP manufacturer have confirmed that Yunnan Germanium, Guangdong Xiandao, and other Chinese InP manufacturers are currently in discussions with Chinese officials about export approvals. However, if they are approved, their shipments abroad will likely be limited. Source: The company is focusing on the domestic market in the short term. There's no evidence that the Chinese government will favour local players over AXT, which wants to export InP from China. The person added that companies like Coherent and Lumentum - which are primarily supplied by AXT and Sumitomo - would be unlikely to easily switch suppliers, since moving to a different supplier involves lengthy qualification cycles. No response was received from either Yunnan Germanium or Guangdong Xiandao to faxed comments.
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Oil prices rise $2 after Iran announces the closure of Strait of Hormuz as a result of US strikes
Oil prices rose?more than?$2 a barrel on Thursday after Iran closed the Strait of Hormuz - a critical energy chokepoint - following the U.S.'s additional strikes against Iran. Brent futures rose by $2.30 or 2.47% to $95.40 per barrel. Meanwhile, U.S. West Texas Intermediate crude (WTI), which is a derivative of WTI, rose by $2.60 or 2.89% to $92.63. U.S. crude futures gained over $3 in the early part of the session. Iran's top Joint Military Command announced on Thursday that the Strait of Hormuz would be closed to all vessels, including commercial and oil tankers, with the warning that any vessel attempting to pass through will be fired upon. The U.S. Military said on X Wednesday that commercial'ships' continue to transit the strait. Iran's state-run media had reported that missiles and drones were used to target U.S. warships near the waterway. U.S. forces launched additional strikes at multiple targets in Iran, starting at 5:15 pm EDT (21.15 GMT). This is the latest of a series of attacks that have escalated and 'threatens to reignite full-scale warfare. Iran's months-long blockade, which usually carries a?fifth of?the?global oil?and?gas shipments, has kept oil prices high. The EIA reported that U.S. crude oil inventories dropped by 7.2 million bbls. to 426.5 million bbls. in the week ending June 5. This was compared to analysts' expectations, which were based on a poll, of a 4 million barrel draw. Since the Iran War began on February 28th, U.S. crude inventories, including those in strategic reserves, have fallen by 79,000,000?barrels as the world's biggest producer has stepped up to fill the supply gaps caused by the closure of the Strait. (Reporting and Editing by Shri Navaratnam.)
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Venezuelan troops deploy against illegal gold miners in the key gold belt
Venezuelan troops have been deployed to target illegal groups that control 'key gold deposits', local residents and human rights activists claim. The government is trying to bring foreign investment into the mining sector, which has long lagged. Residents and activists monitoring the area report that troops have been deployed in Las Claritas, a town located in southern Bolivar State. The town is located in the Orinoco Mining Arc - a mineral-rich area near Venezuelan borders with Guyana, Brazil and Brazil. The Venezuelan Communications Ministry has not responded to a comment request immediately, nor has the government publicly addressed this operation. Five residents reported hearing explosions and gunfire. This caused many people to stay off the street and forced businesses to close. A 45-year old resident reported that "Bombs and gunfire were heard in the jungle". There are mines around those areas. "This is bad, you can't leave." A shopkeeper in Las Claritas reported that drones flew over his store for several hours at night. The residents refused to give their names out of fear for safety. According to non-governmental organizations, and U.N. investigators, much of the mining in the area is controlled by armed groups and organized crime. In a recent post, the rights group Provea stated that "the Venezuelan Army has deployed a massive operation at Km 88 and Las Cristinas in Bolivar State." "We warn against the possibility of extrajudicial executions, and arbitrary detentions of civilians in the region." Operation comes as Venezuela's newly formed government attempts to reopen areas that were previously closed to foreign investment. U.S. troops captured Venezuelan President Nicolas Maduro in January. Delcy Rodriguez was left to assume the position on an interim basis. Since then, Washington and Caracas have been discussing steps to revive investment in oil and mining. Venezuela adopted a new mining legislation in April to encourage foreign investment, while the U.S. Interior Secretary Doug Burgum stated that the government has pledged security guarantees for incoming firms. Crystallex, a Canadian mining company, had planned to develop a gold project at Las Cristinas until Hugo Chavez, the former president, stopped the project as part of his nationalization drive that included electricity, telecommunications and cement, steel, and oil. Foreign investment in mining was limited after?those takesovers. Experts now see potential for a recovery in gold exports within the next few years, but caution that massive investment and renewed exploration will be required. (Reporting and Writing by Daina-Beth Solomon; Editing Jamie Freed).
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ROI-Global trade in rude health? McGeever: Yes, with a catch
Global trade doesn't cool in the shadow of tariffs, wars on trade, real wars, and energy shocks. It's heating. How durable is it when the price, and not volume, is what's stoking up the flames? Recent trade data, from the U.S., China and other major economies, shows that cross-border commerce has grown at a faster rate than economists expected. In many cases the price increases were the primary cause of increased activity and surprising export figures. This reflects the spike in inflation caused by the Iran War, particularly on the oil and energy markets. This was especially true in the U.S. where exports reached a record of $327 billion last month, driven by shipments from a wide range of products. In fact, the goods surplus shrank to its lowest level since 2020. This is good news for the U.S. economic system, since the declining deficit could contribute to the growth of the economy in the second quarter. This could have been primarily due to the high prices of oil, fuel, and other energy products. This raises the issue of how durable this improvement is. It's clear that it isn't just the price that does all the work. The physical export volumes of Canada have returned to their previous levels before Donald Trump was elected to the White House by the U.S. in November 2024. This has sparked trade tensions with the neighboring countries. According to CIBC, the exports of April were only second to those in February last year when companies were preparing for Trump's looming duties. Base effects are another factor that may be affecting headline trade figures. The slowdown in trade during the first half of the year as Trump's tariff wars began is now used to compare year-over-year figures. This suggests that it's too early to predict a?trade revival. HAPPY CHIPS DAY! The price is also an important factor in Asia's trade boom. However, the soaring demand for AI is also fueling the sizzling numbers. China, the largest exporter in the world, saw its total exports rise 19.4% in May. Pantheon Macroeconomics says that sales of high-tech goods accounted for 12 percent of this. While the value of integrated-circuit exports has more than doubled in the last year, export volumes have only increased by 2%. This suggests that the headline figure is inflated because the price was high. The same thing is happening in other sectors. However, Beijing policymakers and critics will continue to focus on headline dollar figures, particularly the large one, China's total 12-month rolling trade surplus of more than $1 trillion. Taiwan's AI export surge was even more impressive. Exports rose in May more than expected to the second highest level by value ever, up almost 52% compared to a year ago. Price was again a major factor. TSMC, the world's largest manufacturer of advanced chips that power AI applications and a major global supplier to Nvidia and Apple, is located in Taiwan. Chips, computer equipment and software, as well as other high-tech products, have seen a surge in price over the last year, largely due to an explosion in demand. Goldman Sachs Global Institute estimates that AI-related investments will reach $7,6 trillion by 2031. SURPRISING RESILIENCE Global trade has shown a remarkable resilience, which few observers could have imagined possible in the face of volatile market conditions. Trump's "Liberation Day tariffs" triggered a global trade war, which may have ended decades of internationalization. Geopolitical rifts also threaten trade flows, notably in Middle East. The 'AI frenzy' is largely responsible for the booming global trade. The demand for these applications has been increasing, a large part of trade in AI products is cross-border and many have been exempted from tariffs. The question is, can this continue? Could the rise in AI compute costs curb demand eventually? Could major powers seek to reduce AI supply chains in order to minimize national security risks? The AI boom is unlikely to fade away, which suggests that trade activity may remain resilient, despite tariffs, protectionism and deglobalization. Everything seems to be dependent on the outcome of this tech story, just as it is with other parts of the global economic system. You like this column? Check out Open Interest, your new essential source for 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.
US strikes on Iran boost oil as shares retreat, techs suffer losses.
Asian stocks dropped on Thursday due to a Wall Street sell-off following a higher-than-expected U.S. inflation reading. Meanwhile, renewed U.S. attacks on Iran fueled a rise in oil prices.
MSCI's broadest Asia-Pacific share index outside Japan fell 0.9%. The drop was led by a 3% decline in South Korea's KOSPI. S&P 500 e-mini futures ?were ?0.3% lower.
The United States launched a new round of attacks against multiple targets within Iran on Wednesday. This came after President Donald Trump had threatened to launch more strikes if a peace agreement was not reached. Iran responded by closing the Strait of Hormuz. Brent crude rose by 2% to $94.93 per barrel after trading resumed in Asia.
Analysts believe that Asian stocks, which had been the strongest performers in the last two months, are likely to continue their recent declines as markets question whether or not the high expectations of earnings growth can be sustained.
In a client note, Rupal Agarwal is Asia quant strategist for Bernstein in Singapore. She said that given the already stretched valuations of these extreme bullish expectations, they set a vulnerable background for momentum in Korea and Taiwan, as well as in the Asia tech sector.
She added that it would be prudent to reduce the stock positions, noting that "the reescalation of the war front could accelerate this unwind."
The S&P 500 fell 1.6% on Wednesday and the Nasdaq Composite was 2.0% lower. Data showed that U.S. Inflation accelerated at its fastest rate since April 2023 last month, although in line with expectations. Brent crude prices ended at $93.10 per barrel, an increase of $1.65, or 1.8%. This was after U.S. president Donald Trump warned that he would resume his attacks against Iran.
The U.S. Dollar Index, which measures the strength of the greenback against a basket six currencies, has held steady at 100.03 and remained within the trading range that it's been in for the last week. The global reserve currency has reached its highest levels since early April, when the U.S. began negotiating with Iran for a ceasefire.
Market expectations for the timing of the rate hike have moved closer but remain very balanced. Fed funds futures now price an implied 51.6% chance that the Federal Reserve will hike rates at its two-day October 28 meeting, compared with a 50.1% probability a day before that it would stay on hold until December.
The yield of the U.S. 10 year?Treasury Bond was up 2.6 basis point at 4.564%.
Bitcoin fell 0.5% to $61,445.19 while ether dropped 0.6% to $1,619.04 as the upcoming SpaceX IPO prompted a rotation away from cryptocurrencies and speculative investments. Gold fell 0.3% to $4,059.59. (Reporting and editing by Jacqueline Wong; reporting by Gregor Stuart Hunter)
(source: Reuters)