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Gold prices drop as investors consider US strike on Iran and await Fed minutes
On Wednesday, gold prices fluctuated between gains and losses as concerns about inflation and higher interest rates rose. Fresh U.S. attacks on Iran also lifted the dollar and oil ahead of the Federal Reserve meeting minutes for June. Gold spot rose 0.5%, to $4,125.59 an ounce, by 0305 GMT. It had fallen to its lowest level since July 2, earlier in the day. ?U.S. Gold futures for August deliveries fell 0.5% to $4136.30. "Over the last 24 hours, inflation was a bit of a concern again. Bonds came in lower, the dollar rose a bit, gold fell, and now it seems like things are stabilizing after this correction," said Ilya Spirak, head of global macro for Tastylive. At this point, "we've been watching gold try to?carve a bottom." The U.S. Military launched a new round of strikes on Iran Tuesday, and revoked the licence that allowed the country to export oil following the projectile attacks against three tankers in the Strait of Hormuz. The dollar held on to its highest levels this week against its major peers, as the strikes against Iran placed pressure on an already fragile ceasefire. The CME FedWatch tool shows that the markets have raised their odds of a Federal Reserve rate hike in September to over 63%, from around 57% Tuesday. Investors are also waiting for the minutes of the Federal Open Market Committee meeting held on June 16-17, which is due later today. These will provide new information about the direction interest rates may take under Fed Chairman Kevin Warsh. Gold is often viewed as a hedge against inflation, but high interest rates can weigh down on the non-yielding investment. (Reporting by Pablo Sinha and Swati Verma in Bengaluru; Editing by Subhranshu Sahu and Harikrishnan Nair) (Reporting from Pablo Sinha and Swati verma in Bengaluru, Editing by Subhranshu Sahu & Harikrishnan Nair).
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Oil prices rise, bonds fall on Mideast hostilities
On Wednesday, oil prices rose and bonds were sold as U.S. sanctions against Iranian 'oil' threatened to disrupt the ceasefire. Stocks also took a pause as the AI rally that has been a record-breaker?starts to lose momentum. Brent crude futures rose 2% to $75.60 per barrel. This is still a far cry from the wartime peaks above $120, but it's enough to cause a stir in the bond markets by increasing inflation risks. Jason Wong is a senior strategist with BNZ Wellington. He said: "Obviously, the market does not like these attacks... But it's still not in full-blown panic mode." U.S. officials said that the U.S. strikes were the latest challenge to last month's peace agreement and targeted air defences and coastal surveillance, as well as drone launch sites. Iran's military leadership has promised a "crushing reaction". Washington?also moved on to withdraw a concession that allowed Iran to sell its oil on the world market. Iran's Foreign Ministry said this breached a framework agreement to?end war. The yields on ten-year U.S. Treasury bonds, which increase when prices decline, rose about three basis points, reaching a new one-month record of 4.565%. "We were reminded of the fact that this peace agreement is still in its early stages," said David Chao, Asia-Pacific Global Market Strategist at Invesco?in Singapore. "I don't think that the current Brent price is a fair reflection of what has been happening in the Middle East." The U.S. Strategic Petroleum Reserve has seen its crude oil stocks fall to their lowest levels since 1983. This leaves the markets more susceptible to future supply shocks. The dollar was strong on the currency markets, pushing the euro to $1.14, and the yen past 162; this raised the possibility of a Japanese retaliation. The New Zealand Dollar jumped about 0.5% to $0.57, after the Reserve Bank of New Zealand increased interest rates as traders expected. The Asian equity market tries to remain steady on Wednesday. Gains in Hong Kong helped MSCI's broadest index of 'Asian stocks outside Japan' stay flat, while South Korea chip-heavy markets fell 1.5%. The Nasdaq dropped through its 50-day average overnight as the market reacted negatively to the blockbuster Samsung Electronics results. This put the AI rally on notice. Samsung reported a 19-fold rise in profits, but its stock dropped 7% on the day. The jitters spread around the world markets and pulled the Philadelphia semiconductor benchmark lower by 4.6%. Samsung shares are volatile, and the last one was down 3%. Sara Perring is the Head of APAC Cash Equity Sales at J.P. Morgan. According to J.P. Morgan Research we should expect increased volatility and continued selling of foreign equities on the Korean stock market in the near-term. Our fundamentally positive view of the long term would lead us to look for opportunities in AI, AI-adjacent investments, financials and wealth-effect plays. Reporting by Tom Westbrook, Editing by Jamie Freed & Sonali Paul
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BHP iron ore employees vote to strike at Port Hedland on July 18, 2018.
BHP Port Hedland workers in Western Australia announced a work stoppage of eight hours on Wednesday, set for July 16. This is expected to affect daily revenues of A$120,000,000 ($83.16,000,000) of iron ore. After six months of unsuccessful negotiations, the unions called for action. According to a statement from the union, workers in the port operations and maintenance department of the company represented by the Combined Ports Unions are expected to participate in the strike. Adam Woodage, Secretary of the Electrical Trades Union WA, said: "This is not anyone's preferred way forward but if it is the only way to move forward, then we will do it." I hope that this action'sharpens' the minds of BHP managers and shareholders on the importance to negotiate for a fair and safe iron ore industry. The unions have made the most significant push to penetrate Australia's heartland of mining in the past 30 years. This is because the Labor government passed a law that gave them the power to negotiate wage agreements with multiple employers, to ask for flexible arrangements, and to allow strikes across the industry. The agreement signed by the 'South Flank' last week included a 16% guaranteed pay increase over a four-year period, an increase in site-based allowances, and a new payment scheme for delayed flights. Port Hedland - which is used by Fortescue and Hancock - ships iron ore worth around $150 million a day. This highlights the potential for disruption.
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As US strikes against Iran fuel fears of a truce unravelling, oil prices are rising.
The price of oil rose by nearly 2% after the U.S. military conducted?airstrikes on Iran and reimposed crude sales sanctions. This sparked fears that their fragile truce could unravel, and Middle East supplies might be disrupted once again. U.S. Central Command announced on Tuesday that the U.S. airstrikes came in response to Iranian attacks against three commercial vessels transiting through the Strait of Hormuz. The Strait of Hormuz is an important waterway used to transport Middle Eastern oil shipments into wider markets. Brent crude futures rose $1.38 or 1.9% to $75.54 a barrel, while U.S. West Texas intermediate crude climbed $1.37 or 1.9% to $71.81 a barrel at 0128 GMT. The two benchmarks both rose by about 3% after the U.S. withdrew the general license authorizing the sale of Iranian crude oil following the Iranian attacks. Saul Kavonic is the head of research for MST Marquee. He said that this is a counter-indicator to the perception that the market will be oversupplied, and that some may not want to cover their record short positions. If tensions continue, and the traffic on the waterway remains below 50% of the pre-war level, then the supply constraints that result could lead to higher oil prices. Oil prices fell to pre-war levels after the U.S. signed its truce agreement with Iran last month. Traders accumulated large short positions on oil futures or made bets about further price drops. The price drop was caused by the expectation of a surge of Middle East supplies that would be released onto the market. Iran has not claimed responsibility for the attacks on vessels, but Qatar has blamed Iran. One of these was a drone attack that caused an engine room fire aboard a Qatari LNG tanker. According to maritime security sources, a crude oil tanker with a Saudi flag, believed to be Wedyan the supertanker, was also damaged off Oman. It was not immediately known what caused the incident. The attacks renewed concerns about tanker traffic in the Strait of Hormuz. Before the war started, cargoes equivalent to one-fifth of the global energy supply were transported through this route. Iran asserts its control over the Strait. It has ordered ships to take a route that is closer to its coastline rather than one that is nearer?Oman which borders the waterway. The U.S. insists that the waterway should remain open to all, as it was prior to the conflict. Since the start of the war, nations have drained their inventories in order to make up for the shortage. Market sources reported on Tuesday that U.S. crude inventories dropped?again' last week. They cited data from the American Petroleum Institute. The analysts polled had predicted that crude stocks would decline by 2.4 million barrels during the week ending July 3. (Reporting from Yuka Obayashi, Tokyo; Additional reporting from Florence Tan in Singapore; editing by Jamie Freed & Christian Schmollinger).
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Oil prices rise and bonds fall as US strikes Iran
Bond futures fell and oil prices rose after the U.S. imposed trade sanctions on Iran following the attacks on tankers at the Strait of Hormuz. Stocks wobbled, as the momentum from the record-breaking AI rally waned. U.S. crude oil futures rose 2.7% to $72.40 per barrel, while 10-year Treasury futures fell seven ticks. Traders priced in the rising risk of inflation and interest rate increases. Jason Wong is a senior strategist with BNZ Wellington. He said that the market does not like these attacks, but it's still not in full panic mode. He said that the past few months have shown the oil market's ability to handle a large supply shock. However, the current vulnerability is the low global reserves. The U.S. Strategic Petroleum Reserve's crude oil stocks fell to their lowest levels since 1983, according to data released this week. Nikkei Futures indicated a?fall in Japanese stocks and S&P500 futures were down about 0.1%. Wall Street indexes fell overnight, after a sharp drop in Samsung Electronics' shares. Despite blockbuster earnings from the company, investors were wary about extending an upswing that had lifted South Korea’s chipmaker-heavy stock market by 82% so far this year. U.S. officials said that the U.S. strikes are the latest in a series of challenges to last month's ceasefire. They targeted coastal surveillance, anti-ship and aerial launch sites as well as air defences. Washington has also pulled out of a deal that allowed?Iran's oil to be sold on the world market. Iran's Foreign Ministry said this was a breach of the framework agreement to end the war. The dollar was strong on the currency markets, pushing the euro to $1.14 and the Australian dollar down to $0.6925. The Reserve Bank of New Zealand will set interest rates later on Wednesday. Markets are pricing in an 85% probability of a rate hike, and most economists predict a similar rise. (Reporting and editing by Jamie Freed; Tom Westbrook)
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US oil prices rise after US military strikes against Iran
U.S. Oil Prices jumped by?nearly 3 percent in early trade Wednesday, continuing the previous session’s gains. This was after a series of strikes launched by the U.S. Military against Iran. The U.S. military's actions raised concerns about a fragile ceasefire. U.S. Central Command said on Tuesday that the strikes against Iran were a response to Iranian attacks on commercial vessels that were?transiting the Strait of Hormuz?. As of 2215 GMT, U.S. West Texas Intermediate Crude was up $1.95 or 2.8% at $72.39 per barrel. WTI closed 2.8% higher on Tuesday, before continuing to rise?in the post-settlement trading after the U.S. revoked its general licence authorizing the sale of Iranian oil following the Iranian attack on commercial ships. Qatar accused Iran of attacking the vessels. This included the massive 'Qatari LNG tanker Al Rekayyat which reported that it was struck by a drone, causing a fire to start in its engine room. The crew was safe and being evacuated. Maritime security sources confirmed that a Saudi-flagged crude?tanker was also damaged near Oman. It is believed to be the supertanker Wedyan. The cause of the incident was not immediately clear. The recent developments have re-ignited concerns about disruptions in tanker traffic along the Strait of Hormuz. Reporting by Yuka Obaashi; editing by Jamie Freed
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Canada and Teck agree on potential investment of C$400M for strategic metals production
In a Tuesday statement, Canada's Natural Resources Ministry announced that the government could invest up to C$400m ($281.93m) in Teck Resources to expand the facility Trail Operations in British Columbia to produce strategic metals. Tim Hodgson of Canada's Natural Resource Minister said that because there is no equity that can be purchased, the investment would be made in a facility in Trail whose value will fluctuate with production. The agreement includes a framework agreement for an "offtake agreement" from the Canadian Government to secure Teck's rights for future production of rare-earth metals like germanium, gallium, and antimony. These?metals can be used in many industries, including infrared optical systems in semiconductors and defense. Hodgson stated that "this?investment" will enable them to'significantly increase production. This will allow us share our essential minerals with our alliance partner." Teck plans to invest C$850m to maintain and enhance Trail Operations' critical minerals processing capability. The government investment is part of that plan. Hodgson said in a statement that providing capital to a mining giant like Teck gives companies the confidence they need to invest in critical Canadian mineral mining and processing project, even in volatile global markets. Canada and its G7 partners have been stockpiling a variety of?strategic metals? that are currently controlled by China. Canada announced earlier this year an agreement to purchase graphite for a predetermined price from Montreal's Nouveau Monde Graphite and sell it on to its allies. Over the last two years, the G7 nations have proposed several steps to combat China's dominance in rare earths - difficult-to extract metals that are used in high-tech weapons, cell phones and EVs. China controls over 90% of this metal and implemented export controls last year as a retaliation to U.S. Tariffs. Teck Resources is the biggest producer of germanium on North American soil.
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Oil prices spike, Wall Street falls as tensions between the US and Iran increase
Late on Tuesday, oil prices spiked on renewed fears of a fragile peace between the U.S. Stocks fell on investor concerns about the?longevity of the AI rally. The Nasdaq Composite, which is heavily tech-heavy, suffered the biggest decline of 1.16%, to 25,818.69. The Dow Jones Industrial Average fell 0.25%, to 52,925.15. And the S&P 500 declined 0.45% to 7,503.85. MSCI's global index of stocks fell by 0.64%, to 1,121.20. The selloff started after Samsung Electronics's blockbuster results, despite the fact that the company forecasted a 19-fold increase in operating profit from April to June at 89.4 trillion dollars ($58.4 billion), marking the third consecutive quarter of record-breaking?operating profits for the world’s largest memory chipmaker. The results did not reassure investors but rather triggered a sell-off in Samsung and rival SK Hynix. Investors are increasingly questioning whether artificial intelligence-related profit growth can be sustained in the event that supply bottlenecks for key components like memory chips ease. A report that Chinese startup DeepSeek is developing its own AI chip was also weighing heavily on the markets. This could help it reduce its dependence on other major chipmakers for training and running its AI models. The market pessimism grew after Qatar accused Iran of an attack on vessels in the Strait of Hormuz. One LNG tanker was forced to evacuate crew members due to the threat of explosion. As part of a move to reduce tensions after the three-month conflict that disrupted global energy supply, the White House revoked the license it had granted Iran to export oil. Both nations are in negotiations to reach a final settlement. The oil prices rose 3% on Tuesday and continued to rise after the settlement. U.S. crude oil was up 5.3% at $72.20 per barrel. Brent reached $76.09, an increase of 5.9%. Josh Young, Chief Investment Officer at Bison interests said that the U.S. sanctions against Iran are a major escalation. "Iran could respond with force and further limit exports through Strait of Hormuz. This would put oil prices at $100+ again in the short term." NATO MEETS TURKEY NATO Leaders met in Turkey on Tuesday. European leaders announced arms deals worth billions of dollars. U.S. president Donald Trump, however, expressed frustration over what he called 'insufficient support for U.S. and Israeli war against Iran. He also resurfaced his calls for the U.S. gaining control of Greenland away from Denmark. NATO allies were expected to discuss plans for a multinational naval mission in the Strait of Hormuz on the sidelines of this summit, along with Gulf Arab Foreign Ministers. Trump stated on Monday that the U.S. will either reach a deal or "finish the task" with Iran. He renewed his threat of military actions as Tehran shows defiance after the funeral of Supreme leader Ayatollah Ayatollah?Khamenei. The dollar index, which measures the U.S. dollar against six other currencies, rose 0.21% at 101.07 while the euro fell 0.24% when compared to the dollar. The yen was hovering above its 40-year low and was at 162.06 dollars per yen. The traders were on alert for any?intervention, given the signs of a possible change in strategy from Japanese?authorities. Before the release on Wednesday of the minutes from the Federal Open Market Committee’s last meeting, the yield of benchmark U.S. 10 year notes had risen 7.01 basis points. Investors may get a better idea of how the new Federal Reserve Chair Kevin Warsh will approach monetary policy. (Editing by Mark Potter and Kevin Liffey; Additional reporting by Satoshi sugiyama in Tokyo, and Amanda Cooper in London)
US announces that it has finished a new round on strikes against Iran
The?U.S. Central Command announced on Tuesday that it had completed a "new round of strikes" against Iran, and that it had "hit over 80 targets in its latest attacks." Washington has also revoked the license that allowed Iran to sell oil following the 'projectile attack' on three tankers in the Strait of Hormuz.
The U.S. military released a statement saying that "U.S. Forces struck Iranian air defense systems, command-and-control networks, coastal radars, antiship missile capabilities, as well as?more 60 Islamic Revolutionary Guard Corps smaller boats near and in the Strait of Hormuz to 'degrade Iran’s ability to continue to attack international commerce flowing through this trade corridor.
"CENTCOM forces are ready to hold Iran responsible if the agreement isn't followed or adhered to."
Iran's top military command warned that the Iranian armed forces will deliver a "crushing" response, accusing Washington of a "blatant aggression," and warning that Tehran wouldn't allow U.S. intervention in the management of Strait of Hormuz. The ceasefire has been fragile in the?Iran?war. The war started when Israel and the U.S. attacked Iran on February 28. Iran then responded by launching its own strikes on Israel and Gulf States that house U.S. bases. U.S. and Israeli strikes on Iran, as well as?Israeli attacks against Lebanon in the 'war' have caused thousands of deaths?and millions to be displaced. Oil prices have also risen and markets all over the world have been shaken by this war. Reporting by Jasper Ward and Kanishka Singh in Washington, editing by Lincoln Feast.
(source: Reuters)