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Gold drops as US Dollar regains its footing. Heads for first monthly gain since five
Gold fell more than 1% on Friday as the U.S. dollar gained ground. The dollar recovered its footing but was still on course to post its best monthly gain since February, as investors reduced their rate hike bets following the Federal Reserve meeting last week. Spot gold fell 1.1%, to $4.055.41 an ounce at 1050 GMT. However, it was on track for a 0.5% weekly increase. Prices have also risen by about 1.7% this month. U.S. Gold Futures for August Delivery dropped by 1.2% to $4053.60. Independent analyst Ross Norman stated that "gold struggles to gain meaningful momentum and is still in the corrective stage of a larger structural bull market." The dollar index has recovered modestly above the key 100 level after its sharp sell-off post-FOMC, taking some shine off gold today." The dollar gained 0.3% on Friday after losing 2.4% in one day, its largest drop since January 2023. The dollar's strength makes gold more expensive for those who hold other currencies. Kevin Warsh, U.S. central Bank chief, vowed that he would bring down inflation at the Fed's policy meeting on Wednesday. This left markets "confused". According to the CME FedWatch Tool, traders now price in a 67% probability of a September rate hike, as opposed to an 80% likelihood a week ago. The data released on Thursday shows that U.S. inflation rates slowed down in June, but this was probably only a temporary easing as the oil price rose due to renewed hostilities across the Middle East. The rise in energy prices has exacerbated inflation fears and reinforced expectations that U.S. rates will be higher, reducing the appeal of non-yielding gold. Gold demand in India was muted as buyers awaited a clearer direction of price, while a stronger Yuan boosted purchases?in the top consumer China. Silver spot fell by 1.7%, to $58.00 an ounce. Palladium fell 1.1%, to $1289.77. Platinum dropped 1.3%, to $1638.77. Both metals are headed for monthly gains. (Reporting by Sukanya Mitra in Bengaluru; additional reporting by Swati Verma; Editing by Diti Pujara)
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As Middle East supply disruptions continue, oil prices are expected to rise
A poll shows that oil prices will continue to rise this year due to disruptions of shipping in the 'Strait of Hormuz' and attacks by Iran-backed Houthis in the Red Sea. These incidents threaten oil flows and increase supply risks. In a survey conducted in July, 31 economists and analyst forecasted that Brent crude oil would average $85.22 per barrel by 2026. This is up from the June forecast of $84.50. The average price of U.S. crude oil is expected to be $80.14, compared to the estimate for June, which was $79.49. These benchmarks have been averaging $87.03 and $82.00 respectively for the year to date. Tobias Keller, UniCredit analyst, said: "The main support is the geopolitical risks premium associated with the Iran conflict. This premium will likely persist throughout the second half of this year and maintain volatility." The U.S. - Iran conflict that began in late February has drastically reduced traffic through Strait of Hormuz. This was a route which carried a fifth of the world's crude oil and gas, and disrupted Middle East production by millions of barrels a year. Recent back-and-forth fighting has ended the brief pause between the two nations. Moreover, the Houthi militia has disrupted shipping in the Bab el-Mandeb Strait, which connects the Red Sea with the Gulf of Aden. This creates a second chokepoint where oil is flowing. OIL DEMAND GROWTH IS SEEN DRIVING IN 2026 According to Phil Flynn of Price Futures Group's senior analyst, it will take four to six month for oil flow from the Gulf to normalise after the United States has reached a durable ceasefire with Iran. Flynn also said that his "base case" assumed that full normalisation would occur by the beginning of 2027. According to the poll, oil demand is projected to fall by 500,000 barrels per day in 2026, to 1.6m bpd. The supply deficit for that year could range from 1 mbpd up to 2.6mbpd. The International Energy Agency predicts that global oil demand will fall by one million barrels per day this year before rising to 2 million barrels per day in 2027. OPEC has lowered its forecast of world oil demand growth for 2026, to 780,000?barrels a day. This is the third consecutive downward revision. Thomas Wybierek is an analyst at NORD/LB. He said: "Given that the global economy was hit hard by energy crisis, a rapid recovery?of the fundamental demand apart from restocking inventories?still appears unlikely." Sources have reported that OPEC+ with its 21 members, which includes the Organization of Petroleum Exporting Countries (OPEC), Russia, and other allies will likely halt oil production increases for three month from October, following a September increase in output.
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German unemployment increases slightly more than expected for July
According to data released by the Labour Office on Friday, the number of unemployed people in Germany rose slightly higher than expected in July. They are now close to 3 million in adjusted seasonal terms. Labour Office data showed that the number of unemployed people increased by 6,000 in seasonally adjusted terms to 2,99 million. Analysts polled had predicted a rise of 5,000. The seasonally-adjusted unemployment rate was 6.4% in November, up from the 6.3% recorded the month before. Daniel Terzenbach is a member of Regional Management Board at the Federal Employment Agency. He said that the weak trend in the labour market has continued. The second quarter gross domestic product of Europe's biggest economy was higher than expected, but there are risks as hostilities between Iran and the U.S. flared up again, meaning that prices could remain high for longer than originally?expected. This would take a toll both on consumption and investment. Geopolitical shocks usually have a delayed impact on labour market data. Marc Schattenberg is an economist with Deutsche Bank Research. He said that early labour market indicators indicate the labour market may move in a sideways direction over the next few months. If the German economy performs as well as it did during the second quarter, however, the labour markets is likely to gain momentum in autumn, said Schattenberg. UNADJUSTED, ABOVE 3 MILLION MARK In July, the number of unemployed people surpassed 3 million. In August last year, the three-million?mark was exceeded for the first decade. This shows 'the impact of economic stagnation on labour market. Terzenbach stated that "unemployment and underemployment have increased noticeably in the month of July due to seasonal reasons." Data released on Thursday showed that the increase in energy prices due to the conflict in Iran caused the inflation to accelerate to 2.8% in July, up from 2.4% the month before. "If sustained, a rebound in GDP will eventually feed through to the labour market," Claus?Vistesen said, chief euro-zone economist at Pantheon Macroeconomics. "For the?near-term, however, it remains difficult." The office reported that the demand for labour is still low. The labour office registered 653,000 job openings in total for July, which is 25,000 more than the previous year.
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Weekend Reads: AI, rusty refineries and Reza Pahlavi
Want some inspiration? Weekend Reads is a weekly roundup of what Open Interest's?team read, watched and listened to. The latest selections include a look at aging Venezuelan refineries and gold flows, as well as the son of Iran’s former 'Shah. This weekend we read... RON BOUSSO. ROI Energy Columnist. I really enjoyed this article on Venezuela's rundown and old refining industry. Venezuela's once-famous refineries have been rusted and damaged over the years by neglect and a recent earthquake. MIKE DOLAN is a ROI Finance & Markets 'Columnist. Take a look at this latest Bank for International Settlements Bulletin to see how central banks struggle with assessing the impact of AI in their economies. They are becoming increasingly concerned about a 'policy recalibration. This may explain in part why central banks are hesitant to make any changes at all regarding interest rates. Andy HOME, ROI Metals Columnist: This exclusive explores tensions between the U.S. Government's desire to stop purchasing?critical minerals from China and the reality of a local supply chain which is far from meeting the country's requirements. CLYDE RUSSELL is a columnist for ROI Asia Commodities. The World Gold Council's latest quarterly report on gold demand trends shows that gold demand was steady in the second quarter. The demand for gold might seem uninteresting on the surface. However, the composition of the demand - with ETF outflows and central bank purchases - is interesting, and indicative of a larger trend. Listen to... AL REED. ROI Research Assistant. The memory shortage?related to?AI buildout?is also driving up the cost of consumer electronics. Galaxy Brain, a podcast from The Atlantic, recently explored the reasons behind this and its potential impacts. We're watching... ANNA 'SZYMANSKI. ROI Editor-in Charge: Investigative reporters Steve Stecklow, Gavin Finch, and Reza Pahlavi sat with the Iranian opposition leader and son of 'Iran's final shah to discuss 'his campaign to bring democratic reform to Iran' and the criticism he's faced on the way. The opinions expressed are solely those of their authors. These opinions do not represent the views of News. News is committed to the Trust Principles and a commitment to independence, integrity, and neutrality.
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Copper prices rise 3% in a month due to concerns about low stock levels
The 'price of copper' rose on Friday, and is on track to rise 3% this month due to increased risk appetite on equity markets and concerns about the 'lack of visible stocks outside america. The benchmark three-month copper price on the London Metal Exchange rose 0.1% to $13,821.50 per metric tonne by 0954 GMT, after reaching $13,883, which was its highest level since 22 July. Ewa Mnthey, ING commodities analyst, said that copper has supportive fundamentals for August. The market still faces a supply deficit and has limited buffers for inventory outside of the U.S. This leaves prices vulnerable to further disruptions or signs of stronger demand. Copper stocks available in LME registered warehouses The number of tons currently on the market has dropped by 50% since mid-January, as large volumes are being marked for delivery. The premium for the LME cash copper contract over the forward three-month contract indicates a tightening of supply in the near term. On Thursday, the price of a ton of metal was $40, its highest level in seven months, compared to a discount at the beginning of July of $49 China's Yuan reached its highest level in over three years against the dollar on Friday. This made dollar-priced materials more attractive to Chinese buyers. The Yangshan Copper Premium faded away, and a recent surge of demand in the country has waned. A gauge of interest in the importation of metal into China has stabilised at $112 per?ton after hitting $115 on July 22, its highest level since November 2022. China's factory output unexpectedly contracted in July due to a decline in new orders. This added further weight to the overall sentiment. Aluminium, among other LME metals?lost 0.8 percent to $3,170.50. However, the metal has still risen 3% in this month because of concerns about shipments coming from the Gulf due to the Iran War. Manthey stated that "supply conditions are improving, especially as Middle Eastern production is regaining momentum and Chinese exports continue to be elevated, but it's still expected that the market will remain in deficit." LME zinc was unchanged at $3,620.50. Lead fell 0.2% to $2,892. Tin gained 0.3% to $44,980. Nickel added 0.1% to 17290. (Reporting and editing by Barbara Lewis; Polina Devtt)
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Germany's Fuchs suspended operations at Saudi joint-venture plant after fire
Fuchs, a German lubricants manufacturer, announced on Friday that the production of its jointly-owned facility in Yanbu (Saudi Arabia) had been suspended until further notification after a Saturday fire caused significant damage to the site. The cause of the fire is not known. It may have been caused by the Houthi?militants who attacked Saudi ports on Saturday. A spokesperson for Fuchs told us that the company relied solely on information supplied by its partner, and was unable to provide further details. The company confirmed that no employees were injured. Yanbu is Saudi Arabia's Red Sea oil port and has now become the main route for Saudi oil to bypass the?Strait of Hormuz, which has been blocked by?Iran. Fuchs, which holds a minor stake in the joint-venture with Alhamrani Group said it would maintain supply to customers through "alternative production arrangements and sourcing arrangements" while reconstruction plans were put in place. A spokesperson stated that the incident will not affect the company's operating profit forecast for the full year. Reporting by Emanuele Bernro and Sabine Wollrab Editing and Miranda Murray by Ludwig Burger
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Chevron beats analyst expectations to record highest quarterly profit in six-years
Chevron reported its highest quarterly profits in at least six years on Friday. The U.S.-Israeli conflict with Iran has impacted the world energy market, which is boosting profits of the largest 'oil' companies. LSEG data shows that adjusted earnings of $12 billion or $6.06 per common share beats the average analyst forecast of $5.56. These results were similar to those of European oil giants TotalEnergies, Shell and others who also reported record profits in the second quarter due to higher oil prices. Eimear 'Bonner, Chevron Chief Finance Officer, said in an exclusive interview that despite the current geopolitical unrest and market volatility the company continues to provide the reliable energy the world needs. The second largest U.S. oil company has lower Middle East production levels than its competitors, which allows it to benefit from higher oil prices and avoid the major output disruptions that have irked rivals like ExxonMobil or TotalEnergies. Upstream earnings were $8.2 Billion, 200% higher than the previous year. Benchmark Brent crude oil prices increased by 23% in the second quarter compared to the first three months of the year, as the Strait of Hormuz was still a limited shipping route. The second quarter saw a total production of?4million barrels per day, up from the 3.85million boepd produced in the first quarter. The U.S. production, centered on the 'Permian Basin, and offshore Gulf Region, has reached a record 2.08 million barrels of oil equivalent per day. Chevron expects to spend 25% less on a barrel of U.S. Shale production this year compared to 2025 due to efficiency. The U.S. refinery's throughput record also helped boost earnings to $4.9 billion. Refining margins reached record levels due to low fuel stocks in the Middle East and globally. Trump could be more critical of the skyrocketing profits. He accused oil companies last month of "price gouging" and asked them to do more in order to reduce gasoline prices. CHEVRON KEEPS DIVIDENDS AND BUYBACKS STEADY Chevron purchased $3 billion worth of shares in the second quarter, and paid dividends of $3.5 Billion that were the same as the previous quarter. Bonner stated that the company will maintain its full-year target of between $10 billion and $20 billion for?share repurchases and focus on strengthening their balance sheet in the long term. Our business must be able to operate in all cycles, because energy is cyclical. She said that they would not change their?plan to suit a quarter. Bonner stated that Chevron joint ventures in Venezuela are currently producing 280,000 barrels of oil per day. She said, "We think that in the next 18-24 months we can increase production by another 15%." She added that Chevron is evaluating "incremental" production opportunities, which would be dependent on favorable terms with the Venezuelan Government. Chevron said Friday that it had achieved $1.5 billion in deal synergies from the acquisition of Hess last year, six months earlier than scheduled and exceeding the $1 billion target originally set at the time of the closing of the deal. Sheila Dang reported from Houston, Nathan Crooks edited the story.
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Gold drops as US Dollar regains its footing. Heads for first monthly gain since five
The?U.S. dollar gained ground on Friday, but gold fell more than 1%. The?dollar recovered its footing but was still on course to post its 1st monthly increase since February, as investors reduced their rate hike bets following the Federal Reserve meeting last week. Spot gold fell 1%, to $4.062.05 an ounce at 0857 GMT. However, it was on track for a 0.5% weekly increase. Prices have also risen by about 1.7% this month. U.S. Gold Futures for August Delivery dropped 1.1% to $4.059.70. Independent analyst Ross Norman stated that "gold struggles to gain meaningful momentum and is still in the corrective stage of a larger structural bull market." The dollar index is now back to a modest level above the '100 mark following the sharp sell-off that occurred after the FOMC meeting. This has taken some of the shine off gold today." The dollar rose?0.3% on Friday after falling 2.4% in one day, its largest drop since January 2023. The dollar's strength makes gold more expensive for those who hold other currencies. Kevin Warsh, U.S. central Bank chief, vowed that he would bring down inflation at the Fed's policy meeting on Wednesday. This left markets "confused". According to the CME FedWatch Tool, traders now price in a 63% probability of a rate increase in September, as opposed to an 80% likelihood a week ago. Data released on Thursday shows that U.S. inflation rates slowed down in June, but this was likely a temporary easing as the oil price rose due to renewed hostilities across the Middle East. The rise in energy prices has heightened inflation fears?and reinforced expectations that U.S. rates will be higher, undermining?the appeal of non-yielding gold. Gold demand in India was muted as buyers waited to see if the price would change, while a stronger Yuan boosted purchases in China, the world's largest gold consumer. Silver spot fell by 1.4%, to $58.14 an ounce. Palladium fell 1.3%, to $1,287.75. Platinum dropped 1.7%, to $1632.63. Both metals are headed for monthly gains. (Reporting by Sukanya Mitra in Bengaluru; additional reporting by Swati Verma; Editing by Diti Pujara)
Stocks rise as Amazon and Microsoft results reignite AI trading, yen swings
Global stocks rose?on Friday, as strong results from Amazon and Microsoft encouraged investors to return to AI trading. Currency traders were alert to possible intervention after the Japanese authorities likely intervened to support the yen.
The yen suddenly'strengthened' against the dollar, before giving the gains back. Traders were alerted to the possibility of a second round intervention. The dollar fell briefly against the yen, but quickly rebounded and traded at 159.94.
Microsoft's quarterly earnings report on Wednesday, which forecasted that it would generate cash through fiscal 2027, eased investor concerns about the AI rally.
Amazon's strongest cloud growth for more than four-years was announced a day after, which calmed investors who were eager to see signs that billions of dollars being invested in AI?buildout were bearing fruit.
South Korea's KOSPI, which had suffered heavy losses this week, jumped 17.91%. This was a record-breaking comeback. The tech-heavy stock exchange, which is still around 30% below its all-time peak, has become a symbol of investor sentiments towards AI-related shares.
Saverio papagno, portfolio manager at North Square Growth Opportunities ETF, said that investors are more focused on long-term economics, capital efficiency and financing than they are on short-term demand.
He said that while concerns about the competition from China, and AI hyperscalers relying on debt, are a concern, selling off could be an opportunity for long-term investment, as "the sector" will resume its leading position once there is more clarity.
Futures on the Nasdaq 100, a tech-heavy index, rose 1.07%. S&P 500 futures and Dow futures, however, rose 0.44% ad 0.48% respectively.
The STOXX 600 index in Europe reached a new record high, and was on track to gain for a fourth consecutive month.
The MSCI All Country World Price Index gained 0.89%, and was on course to end a two-week loss streak. If current levels are maintained, it will end the month losing 0.32%.
BOJ RESTRICTS RATE AFTER YEN Chopped Up
A market source reported that the yen gained when Japan bought yen and sold dollars on Thursday.
"I do not think that intervention will have a significant impact on reversing the trend of yen weakness. The BOJ will need to promise more reinvestment into domestic assets, and increase the pace at which it raises interest rates.
The BOJ held interest rates at the same level on Friday but indicated its intention to increase borrowing costs.
At a recent press conference, BOJ governor Kazuo Ueda stated that inflation risks are skewed?to the upside' and that the central bank is prepared to accelerate the rate increases if monetary conditions are accommodative.
WAR KEEPS?MARKETS On the Edge
The Middle East conflict remains a major concern for global equity markets. Recent strikes in the Middle East have dashed any hopes for an imminent solution, and diplomatic efforts have been sporadic.
Brent crude oil prices rose dramatically in July for the first monthly gain since March.
Teddy Bunzel is the head of Lazard Geopolitical Advisory, Lazard Asset Management. He wrote: "The shock-absorbing mechanisms in oil markets are dwindling quickly, so a failure of de-escalation would be more costly than previous tensions."
The crucial Strait of Hormuz is still blocked. Houthis backed by Iran have also attacked the alternative route through Bab el-Mandeb Strait, making the situation worse.
The 30-year U.S. Treasury yield fell 2.32 basis points, but remained close to its 19-year high. The curve steepened as short-end yields eased.
The Fed did not change rates this week but the comments from the chair of the board confused markets.
(source: Reuters)