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Gold rises on weaker dollar and fading Fed rate hike predictions
Gold prices rose on Monday due to a weaker US dollar and the fading expectation of an increase in U.S. Federal Reserve rates. Investors also continued to watch geopolitical tensions across the Middle East. By 09:25 am EDT (1325 GMT), spot gold had risen 0.28%, to $4387.95 an ounce. ?U.S. Gold futures for delivery in December edged up 0.2% to $4,444.40. Bart Melek is global head of commodity strategies at TD Securities. He said that the gold market seems to be pricing in a stagflationary climate, with softer unemployment and expectations that Fed will 'tolerate current levels of inflation. The US dollar is at a psychologically significant '100 level. Gold is now cheaper for those who hold other currencies, as the dollar has fallen to its lowest level since more than two months. The markets have reduced their bets for a Federal Reserve rate increase after the weaker than expected U.S. employment report last week and the subdued data on consumer inflation. Investors await the minutes of the Fed's July meeting due on Wednesday for hints on the central bank’s policy outlook. CME's FedWatch Tool shows that traders see a 33% chance of an increase in September rates, down from 51.2% one month ago. Lower interest rates tend to reduce the opportunity costs of bullion, including gold, which pays no interest. A senior Iranian official said that Tehran would increase tensions along the Strait of Hormuz, and in other parts of the region, if diplomatic efforts with the United States fail. This was a sign of a more aggressive stance. Silver spot rose 1%, to $65.31 an ounce. Platinum rose 0.8% to $1762.43 an ounce, while palladium increased 1% to $1326.26. (Reporting and editing by Vijay Kishore in Bengaluru, Sumit Saha from Bengaluru)
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Russian ESPO blend crude oil returns to premium compared with Brent due to China's demand, traders claim
Four traders reported that Russia's Far East ESPO blend crude for October -delivery to China -is trading at a?premium of up to a $1 per barrel over ICE Brent. This is largely due to the strong Chinese demand and uncertainty about?oil _supplies originating from the Middle East or Iran. The traders say that Asian buyers are looking for alternatives to Middle Eastern crude oil amid fears of continued disruptions in shipments across the Strait of Hormuz. Oil prices rose on Monday, despite the lack of progress in diplomatic efforts to end the Middle East conflict. One of the traders said, "We don't know how long the Mideast Crisis will last or how much Iran Oil will be shipped out. So the Russian supply is most reliable." The traders reported that ESPO blend cargoes delivered in October have been actively traded. Nearly all volumes were sold at a premium of around $1 per barrel to ICE Brent, based on the price paid by buyers for the cargoes to be delivered into Chinese ports. This compares to September-delivery cargoes which traded at a $1 per barrel discount last month, and then reached parity with ICE Brent. Last time ESPO blend traded?at a higher price than Brent was June. Two traders claim that the strong demand from Chinese refiners has pushed India out of the market as a major buyer of Russian crude oil. Indian?refiners have been unable to secure ESPO 'allocations for October because Chinese buyers had snapped up the available cargoes. Traders said that both China's independent oil refiners as well as?major government-owned oil companies were?active buyers ESPO blending cargoes. Reporting by Siyi Liu in SINGAPORE and Aizhu in MOSCOW. Additional reporting by Nidhi in NEW DELHI. Mark Potter edited the article.
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Nvidia invests $1.5 billion into SB Energy as part of OpenAI datacenter deal
Nvidia is investing $1.5 billion into a 'SoftBank-backed SB Energy, and will secure up to 8 gigawatts in AI computing capacity on a 'campus' being built by OpenAI. This is not the first time that Nvidia has financed the ecosystems that consume its chips. The strategy has fueled demand, but it also attracted scrutiny for the 'circular flow of funds' from the chipmaker towards its biggest customers. As they rush to secure the infrastructure required for increasingly power-hungry AI, leading tech firms are increasingly linking together chip, power and data center development. Nvidia, the chip giant, has acquired land and electricity at Ohio's PORTS -Pike Technology Campus to build an AI datacenter that will utilize its graphics?processors & networking gear. The initial capacity is 4.25 GW. SB Energy and SoftBank will invest at least $4.2 billion to support AI data centers in Ohio grid infrastructure. SB Energy, which is also backed by OpenAI, develops large-scale data center and power infrastructure projects. The company was founded in 2019 and is building several 'data center campuses' to meet the rising demand for AI workloads. (Reporting and editing by Devika Syamnath in Bengaluru)
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Saudi Aramco sells crude oil to Asian refiners outside of Hormuz, according to sources
Saudi Aramco offers crude oil outside the Strait of Hormuz through private negotiations to some asian refiners, according to two sources familiar with the matter. This is similar to the strategy adopted by Abu Dhabi National Oil Co of United Arab Emirates. Sources said that Aramco was in rare talks with buyers about supplying Arab Medium and Arab Heavy crude via STS transfers near Fujairah, UAE. One of them stated that the cargoes would be loaded in September. It wasn't immediately clear how Aramco transported its cargoes to Fujairah. These offers are just the latest indication that 'crude supplies are finding a way to get around the long-term disruption of the 'Strait of Hormuz. Aramco declined ?to comment. Aramco also diverted its Arab Light Crude to the Red Sea Port of Yanbu, for export ever since the Iran War began. It also offered the grade in Egypt's Mediterranean port Sidi Kerir after attacks on the Red Sea by the Iran-aligned Houthis. Aramco has seen its market share in India fall due to disruptions in supply from the Strait of Hormuz, and Red Sea as a result of the U.S. and Israel's war on Iran, and Houthi attacks against vessels. ADNOC sold more than 100,000,000 barrels of oil through tenders, a result of the sustained shipping from within?the Gulf into waters outside the Strait. The arrangement allows 'Asian refiners' to receive crude oil without having to send their own tankers through the Strait of Malacca, where safety concerns have prevented many shipowners entering.
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Copper prices reach six-month high on low inventories
The London Metal Exchange's inventories, which are at their lowest since February, have led to concerns about copper availability. Prices rose Monday by the most in six months. Benchmark copper prices increased by 1.1% to $14,310 per metric ton in official rings. This was up from a previous high of $13,396. Prices for the metals used in construction and power industries reached an all-time record high of $14,527.5 per metric ton in January. Stocks at LME-approved warehouses Since May, copper exports to the United States have decreased by half to less than 210.000 tons. This is because traders are moving the metal to the United States to avoid potential tariffs. If you have cancelled warrants, or metal that is earmarked for delivery at 50%, it means more copper will be leaving the LME system. Although the official data has not yet been published, we are expecting record-high imports in July. "They've been high for the whole year," said Albert Mackenzie. The traders stated that premiums or reversed prices for copper near-term contracts compared to?longer dated forwards? should begin to attract metals to the LME. Cash Copper Contract Premium The three-month futures closed Friday at $416.29, the highest level since November 2021. On Monday, the LME cash copper contract reached a new record high of $14,830 per ton. On Friday, copper deliveries to LME storages totaled 3,700?tons compared to outflows of only 850?tons. Copper stocks are 735,470 short tonnes or 667,207 metric tons in Comex registered warehouses Import tariffs imposed by President Donald Trump in February 2017 have increased nearly 700%. The Shanghai Futures Exchange monitors copper inventories in other warehouses. Since the middle of March, the number of tons has dropped by more than 80% to 69 731. The Yangshan premium The price of copper in China has dropped to $90 per ton, down from $115 on July 22. However, it is still 350% higher than January. The dollar price of industrial metals is cheaper for holders other currencies due to a weaker U.S. dollar. Nickel grew 0.3% and tin 0.5%. (Reporting and editing by Janane Venkatraman, Shreya Biwas and Shreya Biswas; Additional reporting by Solomon Cefai)
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France offers tax incentives to companies that are affected by wildfires
Sebastien lecornu, the French prime minister, announced on Monday tax breaks for businesses affected by recent wildfires that ravaged Southern France. He said that companies of all sizes have been affected by the "severe fires" that have ravaged large areas of the country. He said that the government had approved a budget of EUR12 million ($13.91m) to help towns relocate residents whose homes were destroyed. Lecornu announced the news in Merignac near Le Porge in southwest France, where hundreds homes were destroyed in a massive fire last month. Lecornu was booed by dozens in Le Porge as he visited that area early on Monday morning. Residents criticised the response of the government and accused authorities of prioritising wealthy areas. Last month, a massive wildfire in southwest France, with an 'amplitude that hasn't been seen for decades, destroyed 50,000 hectares and burned down a few hundred houses. It also forced the evacuation of up to 220,000 people. After a series of?severe heatwaves fuelled by climate changes, the vegetation was left tinder dry and prone to wildfires.
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Gold prices rise on weaker dollar and fading Fed hike expectations
Gold prices rose on Monday, as a weaker dollar and diminishing expectations of an increase in U.S. Federal Reserve rates next month boosted bullion. Gold spot rose 0.5%, to $4.398.58 an ounce at 1032 GMT. Prices reached a two-month high in the last week. U.S. Gold Futures for December Delivery edged up 0.4% to $4,455.50. Gold is now cheaper for those who hold other currencies than the U.S. dollar index. "Softer 'inflation', employment and consumer data reduce the risk of another hike. This strengthens the case that the Fed may end up cutting rates," said Ole Hansen. He is the head of commodity strategy at Saxo Bank. The dollar has shown signs of rolling over after its recent strength. This removes?another significant headwind for gold." The Federal Reserve's interest rate hike next month is unlikely to happen due to the unexpected decline in U.S. employment and tame inflation rates. UBS analyst Giovanni Staunovo said that "U.S. gas prices are still above $4/gallon and will continue to exert pressure on the inflation data for the next report." CME's FedWatch?Tool revealed that markets are now pricing in 31% of a rate hike for September, down from the 51% they had priced in one month ago. Gold, which doesn't pay interest, tends to be supported by lower interest rates. Investors are awaiting the minutes of the Fed's meeting in July, which is due on Wednesday. These will provide further information on the central bank’s policy outlook. A diplomatic source reported that U.S. President Donald Trump’s envoys met with Egyptian, Qatari, and Turkish mediators on Sunday in Cairo, to?advance his Gaza peace plan?, even though Israel continued its airstrikes. Silver spot rose 1.5% per ounce to $65.61. Platinum rose 0.7%, to $1759.72 an ounce, while palladium increased 1.6%, to $1333.25 an ounce. (Reporting and editing by Janane Vekatraman, Joyjeet Das, and Dharna Baffna from Bengaluru)
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On Independence Day, the search for victims of the Indonesia earthquake is underway.
Residents in villages?in eastern Indonesia?hit by a deadly earthquake that killed 68 people waited for?help?on?Monday as rescuers searched through collapsed structures to find people trapped under the rubble. Berton SP Panjaitan of Indonesia's disaster management agency said that the death toll had been raised from 54 to 68 late on Monday. He added that over 200 people were injured. Many people are afraid to go back to their homes because of the aftershocks. Panjaitan reported that residents in East Nusa Tenggara were jolted by nearly 1,600 aftershocks as of Monday. The tremor cast a dark shadow on Indonesia's Independence Day celebrations. Geophysics agency of Indonesia reported a magnitude 5.6 earthquake in the area on Monday morning. The quake caused landslides, and roads were blocked in the southernmost province of Indonesia. This included Sikka and Manggarai. Firmus Woge (64), a farmer from a village near the Ende region affected by the earthquake, was treated for asthma aggravated because of the panic caused by the quake. He was having trouble breathing overnight. "But it's getting even worse after this morning's earthquake," he gasped for breath. Emilianus Oro (56), a farmer from Ranukolo Village, told reporters that in tents nearby, 70 residents, mostly women, were without clean water. This led to children getting diarrhoea. He claimed that one elderly person suffered a stroke, and the residents had not received any aid. Veronika, 22 was swaddling her baby in a blanket with her mother in the back seat of a pickup truck, as her home was no longer habitable. She said, "I only eat rice and nothing else." We need help as soon as we can. "We are only salt farmers." SEARCH WILL CONTINUE Panjaitan stated that the search would continue on Monday despite no reports of missing persons being received. Fathur Rahman is the?chief of the Sikka capital Maumere's rescue office. He said on Monday that the search will be centered on aerial monitoring? for anyone who has gone missing, using?a helicopter?and an extrication tool?. Panjaitan reported that authorities were preparing planes for the delivery of aid, such as tents and food. Panjaitan said that the quake had damaged 500 homes. Benjamin Paulus Octavianus said that Indonesia will also build a?emergency field hospital in various areas. Benjamin stated that neurosurgeons and orthopedic surgeons are needed to treat broken bones and head injuries. I DON'T THINK ABOUT IT ANYMORE On Monday, in Jakarta, some 1,500 km (930 mi) west of disaster zones, President Prabowo Subito presided over a celebration marking Indonesia's 1945 independence from Japanese rule. Residents of an Ende village who fled their village in fear of tsunamis took their mattresses and clothes to higher ground. Gervas, a 42-year-old resident from Ende, was asked about his feelings about Independence Day celebrations. He replied: "I don’t think about it anymore. I only think about my wife and 4-year old twins." Reporting by Anandateresia and Stanley Widianto, with editing by David Stanway and Saad sayeed.
MORNING BID AMERICAS-Retail risk
What is important in the U.S. and global markets today by Mike Dolan Editor-at-Large of Finance and Markets
Today, we begin a relatively quiet week in the wake of the first decline in U.S. Retail Sales in nine months on Friday. This will be followed by the second-quarter results of Home Depot, Target, and Walmart later in the week.
Below, I'll go into more detail. Listen to the Morning Bid podcast where we talk about the retail sales missed and much more. Subscribe to the Morning Bid daily podcast and hear our journalists discuss all of the latest news from markets and finance.
RETAIL RISK Amazon's "Prime Day", a discount day for its customers, was brought forward from July to June. The reading is in line with the latest University of Michigan survey, which showed a decline in consumer confidence. This has been combined with the subdued inflation data released last week to reduce expectations of a Federal Reserve rate increase for September. Oil prices have risen in recent weeks due to the standoff with Iran. This could change the picture before the Fed's next meeting, but for now the rate relief has kept Wall Street stock indexes at record highs. Donald Trump said that despite the lack of a breakthrough on the Iran conflict over the weekend, he was willing to pay a little more for gas in order to see the conflict through.
On the Fed front, we should be getting minutes from July's split meeting on Wednesday and an industrial production figure tomorrow. Japan's 10-year borrowing rates reached a three-decade peak on Monday, despite the fact that Japanese GDP was well below expectations with an annualized increase of 1.1% for the second quarter. The Bank of Japan's plans to raise rates may be complicated by a sputtering economy, in part due to high energy prices. However, the yen remained firm on Monday, as the Fed's view was dominated by a weaker dollar.
Chart of the Day China's economy lost momentum in the second half of the year, as retail sales and industrial output both slowed. Extreme weather disruptions combined with persistently low domestic demand renewed pressure on policymakers.
China's 1.4 billion-strong population will not be able to spend again as long as the property market is in a slump. New home prices were down 0.1% and 3.2% compared to a year ago, respectively.
Watch today's events
* New York Fed Manufacturing Survey for August (8.30 am EDT)
* Canada July CPI (8 a.m. EDT)
Want to receive Morning 'Bids in your email every morning? Subscribe to the newsletter. Follow us on LinkedIn or X. The opinions expressed by the author are their own. These opinions do not represent those of News. News is bound by the Trust Principles to maintain integrity, independence and freedom from bias. (By Mike Dolan).
(source: Reuters)