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Gold prices rise on the back of a weaker dollar, inflation data, and Mideast risk in focus
Investors remained focused on interest rates as gold prices rose on Wednesday, as the dollar was subdued. By 0505 GMT, spot gold had risen 0.6% to $4,381.32 an ounce. U.S. Gold Futures fell 0.3% to $4424.70. Dollar-priced precious metals are now more affordable to holders of other currencies. In the short-term, the gold market is experiencing a tug-of war between bulls and bears. This kind of movement may continue until the end of this week when the CPI is released, said Kelvin Wong senior market analyst at OANDA. While the expectation of a hawkish Fed is weighing on gold prices, concerns over fiscal deficits and dollar debasement remain "supportive" for prices. The U.S. consumer price index is due to be released on Friday, and the producer price index will be out on Thursday. Iran's Revolutionary Guard claimed it fired ballistic rockets at a U.S. military base in Jordan and attacked 10 vessels, after the U.S. announced it destroyed five Iranian oil tanks, in a dramatic escalation in the six-month war. Brent crude prices rose for the fourth time in a row. As energy costs rise, they tend to push up inflation. CME FedWatch?Tool shows that traders believe there is a 60% probability the Federal Reserve will?raise rates?at their next policy meeting. Gold is often viewed as a hedge against inflation, but high rates can make it less appealing. Kelly Xu is a commodities analyst at Alpine Macro. She said: "Precious'metals face a short-term test but another major saleoff is unlikely." Silver's long-term support is based on the physical market tightness, structural supply deficits, and inelastic mining production. Spot silver rose 0.9% to $66.31, while platinum increased 1.1% to $2,833.58. Palladium, however, fell 0.1%, to $1347.82.
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MORNING BID EUROPE-$100 Brent in sight, yen defies gravity
Kevin Buckland gives us a look at what the future holds for European and global markets. Brent crude is on the verge of hitting $100 per barrel. This was a level that was last seen at the end of July as renewed fighting in the Middle East has fuelled fears that the conflict may spiral out into a wider regional war. This backdrop is limiting the risk appetite on Asian equity markets - at least in'stocks' that are not part of the AI trade. The yen has refused to follow its usual pattern. The yen is not following the usual script. It continues to push up to seven-month-highs against the dollar, as bets placed on a faster rate increase by Bank of Japan clear out a short position that was once crowded. The other currencies remain subdued despite the fact that a blockbuster week of policy decisions was made by the European Central Bank (ECB), Federal Reserve (FRB), Bank of England and BOJ. The geopolitical landscape is getting even darker. Iran has targeted a U.S. military base in Jordan as a retaliation to U.S. attacks on its oil tankers. Meanwhile, Houthis backed by Iran have struck several Saudi cities. Brent crude moving back above $100 per barrel would deal a major psychological blow to the markets, which have spent most of this year fretting about global inflation. Even the gravity defying AI market showed cracks in July with a sharp correction. However, some of the exuberance returned to the markets recently. SK Hynix has risen over 4%, helping to lift South Korea's KOSPI by more than 2%. Fujikura Electric and Furukawa Electric, Japanese cable manufacturers, soared after a multibillion dollar deal between Verizon Fiber and Corning to provide high-density fiber rekindled excitement over data centres. This helped to keep the Nikkei Index in positive territory, despite a rising yen that typically hurts Japan’s export-heavy stock market. The yen is regaining ground on Tuesday's high rate of 152.89 to the dollar. After comments by U.S. Treasury Sec. Scott Bessent, and speculation that Japanese investors might repatriate their overseas assets into domestic bonds, the rally gained momentum. Market players claimed that the rally was self-reinforcing, as stop-loss orders were triggered. This unleashed a "wave" of short-covering which was 'amplified' by algorithmic trading. Analysts say the next level to monitor is the high of the year, which is 152. According to some, the yen may have overshot and fundamentals could 'pull it back toward 155 ahead of the BOJ meeting next Thursday and Friday. A quarter-point increase in the rate is already priced in but guidance on how fast it will happen will be important. On Thursday, the ECB will likely raise?rates just before potentially market-moving 'U.S. inflation data on Friday. The Fed will make its decision next week. Markets are divided on whether they will hike rates or not, and the BoE's rate is expected to remain unchanged. This week, key developments that may influence the markets include: ECB policy announcement on Thursday US PPI on Thursday and CPI on Friday The UK GDP will be released on Friday
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Indian sponge iron is at a two-year high due to imports of coal and domestic shortages.
India's benchmark prices for sponge iron surged to a two-year peak in August, as traders and analysts reported that the cost of production increased due to higher import coal prices and tighter domestic fuel supplies. India is the 'world's largest producer of sponge iron, with 336 plants producing about 50 million tons. This material is mainly used by secondary steel producers as a raw materials. Traders say that the steel and sponge-iron sector, which accounts for 40% of India's coal imports, is India's largest consumer. According to iEnergy Natural Resources, a coal dealer based in Gujarat, India's thermal coke imports by steel and sponge iron manufacturers fell 19% in India in July, after falling 11% in June. The Middle East tensions have pushed bunker costs and insurance costs to multi-year heights, increasing landed cost into India, said Vasudev Pamnani, director of the trader. Pamnani said that despite low inventories, higher costs have discouraged sponge iron manufacturers from stockpiling their coal. Since long, the industry has 'preferred' imported coal and uses domestic coal as a replacement. Since May, however, domestic coal supplies have been limited as the priority was given to the power sector due to higher electricity demand in the summer. Fuel inventories in several power generators are at critical low levels due to the seasonal monsoon rains that have caused disruptions to coal supply from mines and railway transport. Rahul Mittal is the chairman of Sponge Iron Manufacturers Association. The sponge iron industry uses coal from South Africa. According to traders, several Asian countries, including Vietnam and South Korea are turning to South African coal in order to meet a higher demand for power. The price of coal has increased across all key markets due to the higher demand. Since May, the price of coal in Indonesia has risen by 18%-20%. Prices for coal in Russia and South Africa have also risen by 14% and 19.9%, respectively. Mittal said Indian coal would be the replacement, but monsoon rainfalls slowed down dispatches and pushed up prices. He added that the demand for sponge iron is still 'robust'. BigMint, a commodities consultancy, says that the benchmark Indian sponge iron price rose to a new two-year high in August of 29,700 rupees (US$313) per ton. Analysts and the industry anticipate that prices will remain high for at least a couple more months.
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Volkswagen looks to partner with JSW Group for India's key market
Volkswagen is exploring a partnership with the Indian conglomerate JSW Group in order to increase 'competitiveness' and profitability?in -the?third largest?car market?in the world. A company spokesperson stated on Wednesday that the partnership aims to expand Volkswagen's India portfolio, strengthen local sourcing, and increase manufacturing. The Economic Times newspaper was the first to report on this move. The proposed deal is timely as 'Volkswagen' has been struggling to expand its presence in India. India is a critical?market for the German automaker to?expand outside Europe. It also highlights the challenges that global automakers have to overcome in order to remain competitive on India's fast-growing market. The proposed collaboration is likely to be structured as a partnership between two parties with a joint?control and defined operational roles, along with governance mechanisms that will enable faster decision-making. The companies will also explore ways to?increase local procurement, share vehicle platforms, and expand production capability. Skoda Auto is the leader of Volkswagen's operations in India. Volkswagen has been in the market for over two decades and its market share is still around 2%.
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Oil nears $100 after new Middle East attacks raise supply risk
The oil price rose for the 4th straight session, with a gain of more than $1 on early Wednesday trade. Brent crude futures were up 1.4% to $99.33 per barrel at 0212 GMT. U.S. West Texas intermediate crude was $94.34 per barrel, an increase of 1.4%. Brent crude prices jumped by 25% since early August, as the hopes of a permanent solution to the six-month old war faded and fighting flared up again. Prices are now fast approaching $100 per barrel. The 'Middle East War' intensified Tuesday as Iranian-backed Houthis launched strikes against several Saudi cities, further entangling a U.S. ally in the conflict. The?U.S. The?U.S. Recent developments have only reinforced the idea that (peace) negotiations are still a long way off. The market will likely continue to price a significant risk premium in the interim," ING analysts wrote in a report. The latest attacks could further disrupt?Middle East Oil Supplies, already stressed by strikes against?regional infrastructure? and key shipping lanes. Analysts said that while Saudi Arabia has diverted exports from the Strait?Hormuz to other ports, sustained attacks against the kingdom would complicate efforts to keep crude flowing into global markets. OCBC analysts in a recent note expressed concern about a possible prolonged oil supply disruption due to Iran's attack on Saudi energy facilities and the destruction of five Iranian tankers.
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Oil prices to hit $100; Asia stock markets fall as Middle East tensions increase
Brent crude climbed to $100 per barrel Wednesday, keeping Asian stock markets calm as the attacks intensified in the Middle East. This stoked inflation fears ahead of closely-watched U.S. consumer price indices. As traders exited their short positions, the yen rose to a near seven-month high against the dollar. This was due to expectations of faster Bank of Japan rate hikes as well as a possible rush of Japanese capital repatriation. The euro climbed ahead of Thursday's European Central Bank policy announcement, as markets were expecting an increase amid inflationary pressures due to the Iran War. Iranian-backed Houthis launched attacks on Saudi cities?on Tuesday. Meanwhile, U.S. forces struck multiple Iranian oil tanks and Iran attacked a U.S. military base in Jordan. Prices of oil jumped by more than $1 for the fourth consecutive session on Wednesday. Brent crude futures rose by $1.57 a barrel to $99.49, their highest level since June. ?U.S. West Texas Intermediate crude oil was $94.63 per barrel, an increase of $1.60. The Hang Seng in Hong Kong fell 0.6%, and blue chips on the mainland of China edged up by 0.2%. The rebound in chip and AI stocks has helped other regional benchmarks, however. Japan's Nikkei is up 0.6% after Tuesday's 1.7% drop. South Korea's KOSPI jumped a?1.6%, while Taiwan's TAIEX grew 0.6%. Japanese cable manufacturers?surged following Verizon and Corning signing a deal on high density optical fibre. Overnight, the Philadelphia SE Semiconductor index rose 1.3% despite declines in Wall Street's main three indexes. U.S. S&P futures rose 0.1% after the cash index fell 0.6% on Wednesday. "Across several of the major macro markets, we see indecision in the price action -- tight ranges and a general holding/consolidation pattern," Chris Weston, head of research at Pepperstone, wrote in a client note. Brent crude is "one of most clear real-time signals" for sentiment for the entire market. $100 "now seems like an extremely achievable level," said he. Recent weeks have seen a rise in bond yields due to inflation fears. Traders are pricing higher odds of central bank tightening. The U.S. CPI is due Friday. The odds of the U.S. Federal Reserve raising interest rates by a quarter point or holding them steady on Wednesday next week are almost equal, while the BOJ is all but certain to increase the rate by a quarter point two days later. The yen increased by 0.2%, to 153.66 dollars per yen. This is a slight increase from its previous high of 152.89. Market players say that it 'had surged about 4% in the last five sessions. Hawkish comments by BOJ officials were ostensibly what triggered a move which then snowballed when breaks of key levels led to additional buying. Thursday, the ECB will almost certainly raise rates in the euro zone by a quarter-point. The euro added 0.1% to $1.1629 and is now in the middle of its range for the last three weeks. The pound was little changed at $1.3545. The Bank of England is due to announce their latest policy decision next Thursday. Economists predict that the key rate for the rest of the year will remain unchanged. The Australian dollar rose by 0.1% to $0.7222. Bitcoin climbed to $78,680.60. Gold rose 0.3% to $4,368 per ounce.
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Early trade: Oil prices jump $1 after Iran launches missiles against Jordan
The oil prices rose for the fourth consecutive session on Wednesday, rising'more than $1' in the early trade after Iran launched new attacks on U.S. assets - in the Gulf as the war between Washington and Tehran continues to spread across the region. Brent crude futures were up $1.57 or 1.6% to $99.49 per barrel at 0001 GMT. U.S. West Texas Intermediate Crude was $94.63 per barrel, up $1.60 or 1.72 %. Brent crude prices have increased by 25% since early August, as the hopes of a 'permanent resolution' to a six-month old war faded. In retaliation to a 'U.S. attack on Iranian oil tankers,' Iran's Revolutionary Guards claimed that they had launched ballistic missiles against two U.S. destroyers in Jordan's Al Azraq and what they called 'a U.S. 'base in Jordan's Al Azraq. Attacks on Iranian oil tanks. The state news agency quoted the military as saying that Jordan's air defence systems destroyed 18 out of 20 ballistic missiles launched from Iranian territory. Two missiles fell into unpopulated areas, and no one was injured. Marco Rubio, the U.S. Secretary for State, warned Iran of a retaliatory strike against?Iranian tankers for attempting to attack U.S. warships. Rubio said during a trip to Colombia that Iran continues to try to strike U.S. navy ships. "For every time they try this, they will lose tankers," Rubio informed reporters. The U.S. Central Command announced?on?Tuesday that its forces destroyed five Iranian crude?oil?carriers?on September 8 following two failed missile attacks against a U.S. Navy Warship.
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Oil prices rise as Middle East inflation worries persist
On Tuesday, stocks fell and oil prices soared to $100 per barrel as investors fretted about inflation and the ongoing conflict in Middle East. The three main U.S. indexes all fell on Tuesday, starting off the holiday-shortened work week in a negative note. The Dow Jones Industrial Average ended down 1.18%. Meanwhile, the S&P 500 fell 0.58%. And the Nasdaq Composite dropped 0.32%. The MSCI index of global stocks was down by 0.55% last week. Oil prices rose after the?Houthis, backed by Iran, attacked Saudi energy installations in Yemen. Brent crude oil rose 2.13% to $99,07 per barrel while U.S. crude increased 2.82% to $94,05 per barrel. Inflation has risen in recent weeks and this is partly due to the rise in bond yields which have reached multi-year highs. This puts pressure on central banks to increase interest rates. The European Central Bank will almost certainly raise the euro zone rates by a quarter-point on Thursday of this week. Meanwhile, the Bank of Tokyo is likely to do the same thing next week. This has put the yen in a position for its biggest rally in the past two years. Federal Reserve will also be reviewing its rates on September 16, issuing a statement. The U.S. data on inflation released by the Federal Reserve this Friday may be decisive for setting expectations about the outcome of its upcoming meeting. Money markets indicate that traders currently attach a 58% chance to a rate increase. The yen's rise is a major concern for the global markets. Oil was the main theme on Tuesday. Due to its low yield, traders borrowed yen to buy higher-yielding assets, including currencies, bonds, and equities. This strategy is known as carry trading. The yen gained nearly 4% in the past week, its biggest week-on week increase since July 2024. On Tuesday it was around 153.97 and the dollar was slightly lower for the day. The dollar index, which measures greenbacks against a basket currencies including the yen, the euro and other major currencies, increased by 0.02% at 98.86. Copper, a commodity other than oil, hit a new record on Tuesday as the global supply was tightened. The metal continued to flow into the U.S. in anticipation of possible tariffs. The price of three-month copper at the London Metal Exchange was up 1.5% to $14,728 per ton. On the bond market, U.S. benchmark 10-year Treasury bills yielded 4.8%. This was not far from their highest since November 20,23.
Gold prices rise as the dollar weakens and tensions between Iran and the US support prices
Gold prices rose on Wednesday, as the dollar was subdued. Meanwhile, renewed tensions between the U.S. and Iran and the upcoming inflation figures kept investors focused on interest rate outlook.
By 0442 GMT, spot gold had risen 0.5% to $4,375.89 an ounce. U.S. Gold Futures fell 0.4% to $4,419.90.
Dollar-priced precious metals are now more affordable to holders of other currencies.
In the short-term, the bulls are fighting the bears in the gold market. This kind of movement may continue until the end of this week when the CPI is released," said Kelvin?Wong, senior market analyst at OANDA.
While the expectation of a hawkish Fed is weighing on gold prices, concerns over fiscal deficits and dollar debasement remain "supportive" for prices.
The U.S. consumer price index is due Friday, and the producer price index will be released on Thursday.
Iran's Revolutionary Guard claimed it fired ballistic rockets at a U.S. military base in Jordan and attacked 10 vessels, after the U.S. announced it destroyed five Iranian oil tanks, in a dramatic escalation in the six-month war.
Brent crude prices rose for the fourth consecutive session. As energy costs rise, they tend to push up inflation.
CME's?FedWatch Tool shows that traders believe there is a 60% probability the Federal Reserve will raise interest rates at its next policy meeting.
Gold is often regarded as a hedge against inflation, but high rates can make it less appealing.
Kelly Xu is a commodities analyst at Alpine Macro. She said that precious metals are facing a test in the near term, but that another major selloff was unlikely.
Silver's long-term support is based on the physical market tightness. This will continue to be a major issue as structural supply deficits could persist due to inelastic mine production, and demand for electrification, electronics, and AI infrastructure.
Spot silver rose 0.6% to $66.18, while platinum increased 0.8% to $1,828.85, and palladium dropped 0.2%, reaching $1,346.27.
(source: Reuters)