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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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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.
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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.
The Supreme Court's top cases
In the current term of the U.S. Supreme Court, there are cases that involve guns, gender affirming medical care for minors who identify as transgender, online pornography and religious rights, TikTok and preventive healthcare. There are also cases involving funding Planned Parenthood, job discrimination and federal regulatory powers over nuclear waste storage, vape products and voting rights.
Take a look at the recent and upcoming cases that the justices will be deciding.
'GHOST GUN' On March 26, the court upheld a federal rule targeting "ghost guns", which are largely untraceable, imposed by former Democratic President Joe Biden in an effort to crackdown on firearms that have been used in crimes across the country. The ruling by 7-2 overturned the lower court decision that the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives exceeded its authority when it issued the 2022 rule targeting the parts and kits of ghost guns. The court found the regulation to be in line with the 1968 federal Gun Control Act.
TRANSGENDER RIGHTS During arguments on 4 December, the court's conservative judges indicated that they were willing to uphold Tennessee's Republican-backed ban on gender affirming medical care for minors who are transgender. This case could have a significant impact on other state laws that target transgender individuals. Biden's Administration appealed the decision of a lower court upholding Tennessee’s ban on medical treatment, including hormones and surgery for minors suffering from gender dysphoria. This refers to the distress caused by the incongruity of a person’s gender identity with the sex assigned at birth. The ruling is expected to be made by the end June.
MEXICO GUN LAWSUIT On March 4, the justices showed sympathy for a request by two American firearms companies to dismiss the Mexican government’s lawsuit accusing the companies of assisting illegal gun trafficking to the drug cartels, and fueling violence in Mexico's southern neighbor. The justices heard arguments from Smith & Wesson, a firearms manufacturer and distributor of Interstate Arms in their appeal against a lower-court ruling allowing the lawsuit on the basis that Mexico had plausibly alleged the companies aided and facilitated illegal gun sales and harmed its government. The ruling is expected to be made by the end June.
U.S. TIKTOK BAN On January 17, the justices upheld a federal law that would ban TikTok from the United States if the Chinese parent company ByteDance failed to sell the short video app within a time limit set by Congress. The Justices ruled, 9-0, that the law passed by Congress and signed by Biden last year did not violate First Amendment protections against government abridgment. The justices upheld a lower court decision that had affirmed the measure. Biden's replacement, Republican President Donald Trump chose not to enforce it and instead gave both parties time to work out a compromise.
Online Pornography The Justices heard arguments about whether the First Amendment protects against government interference in speech when a Texas law requires that pornographic sites verify users' ages to limit access by minors. The justices voiced concerns over the availability and accessibility of online pornography, but also expressed concern about burdens placed on adults who wish to view constitutionally-protected material. A trade group representing the adult entertainment industry has appealed the decision of a lower court that upheld the Republican-led State's age verification mandate. The ruling is expected to be made by the end June.
WORKPLACE DISCRIMINATION On February 26, the court heard arguments in a case where a woman claimed that she was denied a job promotion and demoted because of her heterosexuality by an Ohio government agency. The justices seemed to favor making it easier for those from "majority backgrounds" to bring workplace discrimination cases, such as straight or white people. Marlean Amees, the plaintiff, said that she worked with a homosexual supervisor when, in 2019, she was demoted and passed over for promotion to a woman gay. The ruling is expected to be made by the end June.
RELIGIOUS SCHOOL The court will hear a case that tests the separation between church and state. Two Catholic dioceses are attempting to establish the first taxpayer-funded charter school in Oklahoma. St. Isidore Catholic Virtual School was shut down by a lower court, which ruled that the funding arrangement for the school violated First Amendment restrictions on government endorsements of religion. Arguments will be held on April 30.
RELIGIOUS TASKS EXEMPTIONS A Wisconsin Catholic diocese's arm has filed a request for an exemption from Wisconsin's unemployment insurance taxes. The case could have implications for the constitutional rights of religious people. The Catholic Charities Bureau of the Catholic Diocese of Superior appealed the lower court's rejection of its exemption request. If the Supreme Court rules in favor of the bureau, it could force Wisconsin and other states that have similar tax programs in place to expand their exemptions to conform to the First Amendment protections of the U.S. Constitution. The arguments are scheduled for 31 March.
LGBT SCHOOL BIBLES The court accepted a request from religious parents who wanted to prevent their children from attending classes in a Maryland district public school when LGBT stories are read. This is yet another case that involves the intersection of religion and LGBT rights. Parents of children attending Montgomery County Public Schools filed an appeal after lower courts refused a plaintiff's request for a preliminary order ordering the district not to read these books. Arguments will be held on April 22.
OBAMACARE - PREVENTIVE CARE MANDATES The court will determine the legality of an important component of the Affordable Health Care Act, which gives a taskforce established under the Obamacare healthcare law the power to demand that insurers provide preventive medical services without cost to the patient. The court heard an appeal from the Biden administration against a lower-court ruling which sided with a Christian group of businesses that objected to the fact that their employee health plans covered HIV-preventing medications and had argued the task force structure violated U.S. Constitution. Arguments will be held on April 21.
PLANNED PARENTHOOD FINANCE The court will examine South Carolina's attempt to cut off funding to Planned Parenthood. This case could support conservative states in the U.S. who want to deny Planned Parenthood government money for reproductive healthcare. A lower court barred the Republican state from cutting off funding to Planned Parenthood South Atlantic under the Medicaid insurance program. Arguments will be held on April 2.
NUCLEAR WASTE STORAGE On March 5, the justices heard arguments over whether the Nuclear Regulatory Commission had the authority to issue licenses for certain nuclear waste facilities, amid objections raised by the state Texas and oil industry interests. The U.S. Government and a company awarded a license to operate an operation in western Texas by the NRC appealed the ruling of a lower court declaring that the storage arrangement was illegal. The NRC regulates nuclear energy in the United States. The NRC is expected to make a decision by the end June.
FLAVORED vapor products The Court on April 2, largely backed up the U.S. Food and Drug Administration in its refusal to allow two ecigarette companies to sell flavored vapes that regulators deem a risk to health for youths. The court threw out the lower court decision that found the FDA violated a federal law known as the Administrative Procedure Act by rejecting the applications of the companies Triton Distribution & Vapetasia to sell these nicotine-containing items.
EPA AUTHORITY On March 4, the court handed a major blow to the Environmental Protection Agency with a ruling of 5-4. The case involved a wastewater treatment plant owned by San Francisco. This could make it more difficult for regulators and water quality inspectors to monitor pollution. The court ruled that EPA had exceeded its authority in a law against pollution by including vague restrictions on a permit for the facility which discharges into the Pacific Ocean. In recent years, the court has limited the EPA’s power as part of a number of rulings that have curbed the federal regulatory agencies’ powers.
TAILPIPE Emissions A major case that tests the power of the Democratic-ruled state to combat greenhouse gases is a challenge by fuel producers against California's standards on vehicle emissions and electric vehicles under a federal law on air pollution. Valero Energy, along with fuel industry groups, appealed the lower court's decision to reject their challenge against a Biden administration decision to let California set its own regulation. Arguments will be held on April 23.
The Supreme Court is hearing a dispute regarding the legality and operation of the TELECOMMUNICATIONS SERIES FUND, a fund that Congress authorized to be operated by the Federal Communications Commission in order to increase access to telecommunications. The conservative Consumers' Research group and others accused Congress of illegally delegating authority to an independent federal organization. The FCC, along with a coalition including interest groups and telecoms companies, appealed an earlier court decision which found that Congress had violated the Constitution when it gave the FCC the authority to manage the fund. Arguments will be held on March 26.
LOUISIANA ELECTORAL MAP On March 24, the justices heard arguments in a bid to preserve an election map that increased the number of Black-majority districts in the state. This was in response to a legal challenge brought by a group voters who identified themselves as "non African American." Three federal judges determined that the map of Louisiana's six U.S. House of Representatives district - which now has two Black-majority areas, instead of one - violated the Constitutional promise of equal treatment. The ruling is expected to be made by the end June.
Death Penalty Case On February 25, the court threw away Richard Glossip’s conviction in Oklahoma for a murder-for hire plot that took place in 1997 and gave him a fresh trial. In a 5-3 decision, the justices concluded that prosecutors had violated their constitutional obligation to correct false testimony from their star witness. The justices reversed the lower court decision which had upheld Glossip’s conviction. They also allowed his planned death to proceed despite Glossip’s claim that prosecutors had wrongly withheld information that could have helped his defense. (Compiled by Andrew Chung and John Kruzel; edited by Will Dunham.)
(source: Reuters)