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Gold gains more than 1%, but focus shifts to Middle East tensions
Gold prices rose by more than 1% 'Thursday, as bargain hunters emerged after the price fell to a one-week low. Investors also kept an eye on developments in Middle East. Gold spot rose by 1.3%, to $4130.58 an ounce at 2:05 pm EDT (1805 GMT) after Wednesday's drop to its lowest price since July 1. U.S. Gold Futures for August Delivery settled 1.4% higher, at $4.140.80 an ounce. After yesterday's drop, there is a lot of bargain-hunting going on. Bob Haberkorn is a senior market strategist with StoneX. He said that the Fed will be the primary driver of gold in the short-term. Haberkorn said that if the Fed adopts a more dovish approach to interest rates then gold and silver will move higher. If it indicates a need to increase rates further, both metals are likely to be under pressure. The geopolitical situation is also tense. After U.S. airstrikes in Iran's eastern and southern provinces, the?Iranian military launched attacks against U.S. infrastructure in Gulf neighbouring states. The war may cause higher energy prices, which can lead to inflationary pressures. This could also fuel expectations that central banks will raise interest rates. Gold is often seen as a hedge to inflation. However, rising interest rates tend to make gold less attractive by increasing the appeal for assets that pay interest. According to the CME FedWatch Tool, traders are pricing in a 62% probability of a rate hike in September. The minutes of the Federal Reserve's June meeting showed that inflation was a growing concern. A few policymakers saw grounds for an increase in rates before the central bank decided to hold them. Investors will also closely follow?next weeks inflation data as well as Fed Chair Kevin Warsh’s congressional testimony to gain further insight on the direction of monetary policy. In a Thursday note, HSBC reduced its average 'gold price forecasts' for 2026-2027 to $4,560 and $5,925 respectively. Silver spot gained 3.4%, to $60.25 an ounce. Platinum rose 2.3%, to $1,615.25, while palladium rose 3.3%, to $1,253.25. (Reporting by Sukanya Mitra in Bengaluru; Editing by Joe Bavier, Diti Pujara and Jonathan Ananda)
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US EPA suggests easing Biden heavy truck emissions regulations
The U.S. Environmental Protection Agency (EPA)?on Wednesday proposed to ease heavy-truck and engines emissions regulations?adopted by Democratic President Joe Biden under 2023. This will allow for the sale of certain engines that don't meet the stricter tailpipe?rules. The EPA has proposed reducing the requirements for emissions warranties and allowing additional time to implement longer regulatory useful lives. The EPA has noted that certain 2027 medium- and heavy-duty engines have faced technical challenges. It proposes allowing manufacturers to sell their current products until they complete the development of 2027 compliant engines. EPA stated that even after its proposed changes the reduction in smog-forming Nitrogen?oxides would still be almost 90% of the forecasted Biden emission standards. EPA Administrator Lee Zeldin'said that the existing requirements are unworkable and would increase costs, resulting in fewer options. According to him, the rule will'save up to $6,000 per truck or $12 billion. Environmental groups claim that the proposed changes will increase pollution and harm the public's health. Environmental Defense Fund said in a press release that the Trump EPA's proposal to weaken clean air protections would result in more health problems and higher costs. "EPA should abandon its proposal and maintain strong pollution protections for new heavy duty vehicles. The Trump administration is taking a number actions to reverse Biden regulations to require cleaner and more electric vehicles. Last month, ?the EPA sent the Republican-controlled Congress landmark California vehicle emissions rules for potential repeal, ?its latest effort ?to prevent tougher state tailpipe requirements. Trump's administration also passed rules that make it easier for automakers sell more gasoline powered cars and trucks while making it costlier to buy electric vehicles. The White House also significantly weakened federal tailpipe regulations. Congress passed legislation to end penalties in 2025 for vehicles not meeting tailpipe'standards. This saved automakers hundreds of millions if dollars for selling cars that were not compliant with pollution rules. In February, the EPA repealed a scientific conclusion that greenhouse gas emissions are harmful to human health and removed federal tailpipe emission standards for cars.
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New York takes legal action against 3M, DuPont and others for toxic "forever chemicals" in consumer products
New York filed a lawsuit against 3M, DuPont, and other companies on Thursday, accusing them of harming the environment, and causing people to be sick, by selling toxic "forever chemicals", which were used in consumer products. Letitia J., the state's attorney general, accused the companies for hiding risks associated with chemicals called PFAS. This was done even though they were phasing some of these chemicals out. She said that the defendants did not do anything to reduce the public nuisance caused by their manufacturing and selling of chemicals for many decades. Chemours and Corteva, who were once part of DuPont, are also defendants. James wants companies to pay for cleanup, properly warn consumers of the risks and pay civil fines, damages and restitution. The defendants didn't immediately respond to comments. James stated in a?statement that "for far too long our communities have unfairly borne the costs to protect people from these toxic chemicals forever and clean up their contamination." I look forward to ensuring that the companies responsible for PFAS contamination are held accountable. The lawsuit was filed at a state-level court in Albany, New York state's capital. CHEMOURS SETTLEMENT WITH U.S. DREW CRITICISM Per- and polyfluoroalkyl substance, also known as PFAS, is found in hundreds consumer and commercial products, including non-stick pans, stain-resistant clothes, and cosmetics. The "forever chemical" label is given to them because they are not easily broken down in the body or environment. PFAS are linked to adverse health effects such as higher cholesterol, lower birth weight, reduced immunity response to vaccines and kidney and testicular carcinoma. 3M has agreed to pay up to $450m to New Jersey over a 25-year period to settle claims that its chemicals contaminated the drinking water of the state. Chemours settled with the U.S. Government for $450 million last month to settle charges that its chemicals contaminated waterways in New Jersey, North Carolina, and West Virginia. Chemours settlement, though the first of its kind for the federal government to settle pollution claims against a PFAS maker, was deemed inadequate by some environmental groups. North Carolina Governor Josh Stein, and Attorney General Jeff Jackson, both Democrats called the agreement reached with President Donald Trump's Administration a "backroom" deal that did "virtually" nothing to help residents of their state. Trump's U.S. Environmental Protection Agency announced in May that it would rollback some of the limits set by former President Joe Biden in 2024 for PFAS levels in drinking water. Reporting by Jonathan Stempel, New York; editing by Chizu Nomiyama, David Gregorio
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The strategic oil reserves will support the crude demand until 2028
Analysts and officials have said that governments are planning to purchase millions of barrels by 2028 in order to replenish 'emergency reserves' depleted due to drawdowns. This is to fill a void?in the global supply caused by a U.S.-Israeli attack on Iran. They say that this could increase demand for crude oil, which would absorb a portion of the global surplus expected after OPEC+ decided to increase production. The government has reduced emergency reserves following supply disruptions related to the conflict that have removed estimated 1.5 billion barrels of global inventories in this year. Calculations based on International Energy Agency (IEA), OPEC, and U.S. Department of Energy's data. After disruptions in Strait of Hormuz pushed crude prices dramatically higher, the IEA coordinated a 400-million barrel release. Brent crude reached $126 per barrel by?late April, and U.S. Crude approached $120 at the beginning of March. According to the commodities analysis firm?Kpler, replenishing these reserves could result in 664,000 barrels of daily demand by the third quarter of 2027. This would help absorb some of next year's excess supply as OPEC+ unwinds production cuts. This would reduce price drops. Christopher Haines is the head of oil for Energy Aspects. Michelle Brouhard of Kpler, the head of policy and geopolitical risks, stated that refueling reserves would generate 506,000 bpd more crude demand by 2026's fourth quarter, with further growth next year. US TO START FILLING FIRST The United States has promised to release 172 millions barrels through the IEA program. It is expected that it will begin receiving oil later this year under exchange agreements which require companies to return loaned barrels and additional barrels in addition to a premium. US has signed contracts to lend 133 million barrels out of the 172 millions so far. The Department of Energy reported on Monday that U.S. Strategic Reserves fell by 6.2 millions barrels, to 319.5 Million in the week ending July 3. This is the lowest level since April 1983. Chris Wright, the U.S. Energy secretary, said at an event held by Next in late June that the government expected to receive on average 1.28 barrels per barrel released as part of exchange agreements. Wright stated that the returns would be able to boost SPR inventories above 400 million barrels. Washington is also exploring ways to increase stocks beyond 500 millions barrels. Former U.S. Energy Information Administration Administrator Jay Hakes said that the United States could replenish its reserves faster than other countries, because exchange agreements allowed stocks to return back to pre-war level without additional government expenditure. Naveen Das is a senior oil analyst at Kpler. He said that for other IEA member countries, the outlook is more flexible and based on 2027. Analysts predict that countries such as Japan and South Korea will replenish their reserves gradually. However, the efforts to do so may depend on the oil price and government spending decisions. ASIA EXPANDS ITS STOCKPILING Analysts said that lower oil prices may encourage China to stockpile more oil, creating a new source of demand alongside the restocking of reserves by IEA nations. Michael Haigh is the global head of commodities at Societe Generale. He said that historically, when Brent crude prices fall below the 12-month moving-average, China begins to?buy and fill SPR. Brent front-month contracts were trading at around $78 a bar on Thursday. This was slightly higher than their 12-month moving median of $76.59 a bar, according to LSEG 'data. In response to the Middle East energy crisis, several Asian countries -- who rely on Gulf supplies -- are increasing?storage capacities. China is building eleven new strategic oil storage facilities, and India plans to expand the strategic petroleum reserves capacity at Chandikhol and Padur. Japan is helping the Philippines develop a national system of strategic petroleum reserves.
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Gold gains more than 1%, but focus shifts to Middle East tensions
Gold prices rose by more than 1% on Thursday, as investors sought bargains after the price fell to its lowest level in a week. Gold spot gained 1.2%, to $4.126.49 an ounce at 11:35 am EDT (1535 GMT), following a Wednesday drop to its lowest price since July 1. U.S. Gold Futures for August Delivery climbed 1.4% to $4137.20 an ounce. After yesterday's drop, there is some bargain-hunting going on. Bob Haberkorn is a senior market strategist with StoneX. He said that the Fed will be the primary driver of?gold in the short-term. Haberkorn said that if the Fed signals it needs to?further increase rates?, then both metals are likely to be under pressure. The 'geopolitical front' saw the Iranian armed forces launch attacks on U.S. military installations in Gulf neighbouring states after U.S. airstrikes in Iran’s eastern and southern provinces. This put pressure on a ceasefire agreement that had been in place for three weeks. The war may cause higher energy prices, which can lead to inflationary pressures. This could also fuel expectations that central banks will raise interest rates. Gold is often seen as a hedge against inflation. However, rising rates can make gold less attractive by increasing the appeal for interest-bearing investments. According to the CME FedWatch Tool, traders are pricing in a 63% probability of a rate increase in September. The minutes of the Federal Reserve's meeting in June revealed a growing concern over inflation. A few policymakers saw grounds for an increase before the central bank decided to hold rates. Investors will also closely monitor the Fed's Kevin Warsh congressional testimony and next week's data on inflation to get a better idea of the direction that monetary policy is heading. HSBC lowered its gold price forecasts by?$4,560 and $4,592 for 2026 and 2027, respectively. They were previously $4,864 or $5,000. (Reporting by Sukanya Mitra in Bengaluru; Editing by Joe Bavier and Dita Pujara) (Reporting by Sukanya Mitra in Bengaluru; Editing by Joe Bavier and Diti Pujara)
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Sources say that the Saratov refinery in Russia has been shut down since Wednesday after a drone attack.
Two sources familiar with the matter said that Russia's Saratov refinery stopped processing oil on Wednesday due to damage caused by a drone attack. In recent months, Ukraine has increased its attacks on Russia's energy infrastructure to try and undermine Moscow's military effort. Fuel shortages have been reported in Russia as a result of the attacks, with long queues at fuel stations, higher fuel prices and fuel exports being restricted. This week, the largest oil refinery in Russia, Omsk, halted its operations after a drone attack by Ukraine. Roman Busargin, the governor of Saratov region, said in a Telegram message on Wednesday that an air strike had resulted in the death of?one individual, several other injuries and damage to what he called "civil?industrial sites". He did not mention the sites. The Ukrainian military, however, said that it had hit a Saratov refinery. Sources claim that drones struck the refinery's primary refining plant, CDU-6. This unit has a daily capacity of 20,000 tons. It is the only one in the refinery. Owner Rosneft has not responded to a comment request. The data from the St Petersburg International Mercantile Exchange showed that fuel from the Saratov Refinery has not been offered since Wednesday. The refinery has also suspended its operations following drone attacks in March and May. The plant will process 5.8 million metric tons of oil in 2024. This is 2.2% of the total oil refining of Russia. It will produce 1.2 million metric tons of gasoline and 1.9 million metric tons of diesel, as well as 1.0 million liters of fuel oil. Barbara Lewis edited the report by Barbara Lewis.
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Wall Street gains as Middle East concerns are offset by tech-related hopes
Investors weighed renewed tensions in Middle East against continued strength in technology shares and resilient data in economics to determine if the market was going up or down. Oil prices fluctuated as the Iranian military responded to a second evening of U.S. airstrikes by launching new attacks against U.S. military facilities in Qatar, Kuwait and Bahrain. Brent crude futures fell 0.62%, to $77.54, after earlier climbing to $79 per barrel. U.S. crude fell 0.92% to $72.84 per barrel. Wall Street began the day with optimism after losing a little value on Wednesday afternoon as a result of the renewed military actions in the Middle East. The Dow Jones Industrial Average rose 0.16% to 52,433.50 in early trading; the S&P 500 gained 0.41% to 7,513.49 and the Nasdaq Composite increased 0.62% at 26,030.46. MSCI's index of world stocks rose by?0.47%. Treasury markets saw yields on benchmark 10-year U.S. Treasury bonds drop to 4.56% after starting the month at 4.40%. Max Kettner, HSBC's Chief multi-asset strategist, said that the bond markets remained extremely sensitive to the Middle East tensions due to the potential implications on inflation and global interest rate. He said that the market rates are really following oil prices. "That's been pretty clear over the past few days." VOLATILITY OF TECHNOLOGY In Europe, the pan-European STOXX 600 Index remained unchanged at 0.7%. Tech stocks rose 2.6%. The global sentiment was also boosted by a report that China may allow limited access to AI leaders Nvidia's chips H200 and reports that SK Hynix’s U.S. stock listing of $28 billion was more than 7 times oversubscribed. The South Korean chipmaker's offering, which will finance the construction of new factories to meet the surging demand for AI chips, is expected to be the second largest share sale in the world after SpaceX's $85.7 billion IPO, held last month. HSBC's Kettner stated that the "realised volatility" of South Korea's KOSPI is 75% at present. Comparatively, the realised volatility for a 7-10 year U.S. Treasury exchange-traded funds is typically around 3%. MUTTED CURRENCY Markets Early data from the day showed that the number of Americans who filed for unemployment benefits dropped last week. This suggests the labor market is stable, despite the slowdown in job creation in June. The Labor Department reported on Thursday that initial claims for state unemployment benefit fell by 2,000, to a seasonally-adjusted?215,000 in the week ending July 4. The economists polled for? The economists polled by? The currency markets were largely muted. The dollar barely changed, while the yen remained near a record low. Sterling, the euro and most other European currencies hardly moved on the day. The first FOMC minutes under the new Federal Reserve Chair Kevin Warsh were released on Wednesday. They showed that there was growing concern about inflation. According to CME FedWatch, the implied probability that a Fed rate hike will occur this year has increased to 87%. As oil prices fell, gold edged up to $4133.62 per ounce. (Stella Qiu contributed additional reporting from Sydney; Philippa Fletcher and Ros Russell edited the article.)
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Williams does not expect sustained rise in energy prices
John Williams, President of the Federal Reserve Bank of New York, said Thursday that despite a renewed 'war in the Middle East he did not expect a sustained increase in energy prices for the rest of the year. The markets expect the oil price to drop over the next 6-12 months. Williams told a bank conference that he thought this was a reasonable baseline. Williams said, "I think that's a pretty reasonable baseline." He was speaking at a conference held by his bank. "I still believe kind of the fundamentals is that energy prices will likely be around their peak before coming down over time." Williams responded to if the Fed would respond to recent events during the Federal Open Market Committee (FOMC) meeting scheduled for July 28-29. It's not like we make decisions forever. The New York Fed's leader spoke one day after meeting minutes were released for the central banks mid-June meeting on monetary policy, where officials kept their target interest rate range at 3.5% to 3.75%. Although the forecasts were released, they indicated that officials had penciled in rate increases for this year due to persistently higher than target inflation. Chairman Kevin Warsh was leading his first FOMC and refused to give any guidance on the 'outlook. He even refused when asked how incoming data could influence his monetary policies views. Williams stated in a TV interview on Tuesday that his optimism about the overall low levels of inflation has grown due to the falling energy prices linked to the apparent resolution of the Middle East conflict. He also reiterated that the monetary policy was in the correct position, given the risks that the economy faces. The restart of hostilities, which once again threatens the flow of goods and energy, has quickly thrown this outlook into doubt. The risk of rising energy prices and inflation in the rest of the year has increased, with President Donald 'Trump' claiming the agreement which ended the hot phase was now null and void. Williams spoke out as Warsh considers changes to?the Fed's interest rate toolkit?, in an effort to further reduce the size of central bank balance sheets. Many proposals focus on allowing financial firms to keep less emergency cash in hand. However, many are concerned that this could make them more vulnerable to financial shocks. They may also become more dependent on borrowing money from the Fed during times of crisis. Some Fed officials have argued that the Fed's balance sheet is not a problem. They argue that managing short-term interest rates and market liquidity, the Fed's primary goal, has been successful. Williams stated that any change must prioritize the safety and stability the banking system. Williams said that the focus of any change should not be on how much of the Fed's balance sheet can be reduced. Instead, the priority should be to improve and strengthen the financial system.
Wall Street rises and oil prices fall as Middle East conflict returns
Wall Street surged Thursday, despite a drop in oil prices. Investors focused more on the strength of technology shares and the economy as compared to concerns about a renewed military campaign in the Middle East.
The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all rose in midday trading.
The MSCI index of global stocks was up by 0.72%. Stocks rose in spite of renewed conflict in Middle East. Both the U.S. & Iran announced military strikes in Gulf, as their fragile interim peace agreement frayed. The oil prices that jumped on Wednesday when the U.S. announced its strikes, fell on Thursday, as investors awaited more clarity. U.S. crude oil was down by 2.14% last week at $71.94 per barrel. Brent fell by 2.44% to $76.12 a barrel. U.S. data on Thursday painted a mixed image. The number of Americans who filed for unemployment benefits dropped last week. However, a separate report showed that home sales had unexpectedly declined as house prices reached a record-high.
The Labor Department reported on Thursday that initial claims for state unemployment benefits fell by 2,000, to 215,000 seasonally-adjusted for the week ending July 4. The economists polled had predicted 218,000 claims for this latest week.
The National Association of Realtors' report found that tight inventories were driving up prices, complicating sales and highlighting the affordability issues facing many potential homeowners in the U.S. Last month home sales fell?2.4% to a seasonal adjusted annual rate of 4,09 million units. The economists surveyed by predicted that home resales will increase to a rate 4,20 million units. Treasury markets saw benchmark 10-year U.S. Treasury Yields drop to 4.535% for the day. They had started the month at around 4.40%. The dollar index, which measures greenbacks against a basket including the yen, euro and yen, fell 0.14% at 100.88. The pound rose 0.17%, to $1.3409 after hitting a low of seven months in late June.
TECH FOCUS Global mood was also boosted by a report that China may allow limited access to AI leaders Nvidia's chips H200 and reports that SK Hynix’s $28 billion U.S. listing of shares was more than'seven times' oversubscribed. South Korean chipmaker plans to price their American Depositary Receipts (ADRs) at $149 in order to raise $26.5 billion.
The IPO of SpaceX, the record-breaking $85.7 Billion IPO, last month, was the second largest share sale in the world. In midday trading the Philadelphia SE Semiconductor Index gained 4.6%, indicating that it will be a second consecutive day of gains. The June FOMC minutes released on Wednesday, the first under new Federal Reserve Chairman Kevin Warsh showed some concerns over inflation. According to CME FedWatch, the implied probability that a Fed rate hike will occur this year has increased to 87%. John Williams, the New York Fed president, said on Thursday that he didn't expect sustained increases in energy prices throughout the year.
As oil prices fell, gold edged up to $4132.78 per ounce. (Editing by Ni Williams, Ros Russell and Tomasz Janowsk; Additional reporting by Stella Qiu and Marc Jones, Sydney)
(source: Reuters)