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Gold prices rise on US interest rates expectations
Gold prices rose Monday on expectations of more U.S. rate cuts following comments by Christopher Waller from the U.S. Federal Reserve Board. However, a stronger dollar, and easing trade tensions held gains back. By 0905 GMT, spot gold had risen 0.5% to $4,020.45 per ounce. U.S. Gold Futures for December Delivery rose by 0.9% to $4031.50. "We're still in consolidation mode." It's a little more difficult because there are no U.S. data, but weaker U.S. data will support rate cuts by the Fed and should allow gold to reach $4,200 an ounce before the end of this year, said UBS analyst Giovanni Staunovo. Fed's Waller, who cited the weakening labour market, said that the Fed should reduce the interest rate policy again in December. According to CME's FedWatch tool, traders are pricing in a 70 percent chance that the Fed will cut rates in December. Gold that does not yield is more popular when interest rates are low or in economic times of uncertainty. Investors are watching other news this week including ADP U.S. Employment Data and ISM PMIs for indicators that may alter the Fed's aggressive stance. The safe-haven strategy has decreased at this time due to the de-escalation in U.S. China trade tensions. This could be a move towards a more aggressive play on equities, said OANDA analyst Kelvin Woong. Last week, U.S. president Donald Trump agreed to reduce tariffs against China in exchange of concessions from Beijing on the illicit fentanyl market, U.S. soya bean purchases and rare earths imports. The dollar index was near its highest level in three months, which made gold more expensive to buyers of other currencies. Other metals rose as well. Spot silver increased 0.5% to $49.90 per ounce. Platinum climbed 2.2%, to $1.601.91, and palladium jumped 1.3%, to $1.452.58.
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Letter shows that activist Palliser is putting pressure on Rio Tinto in order to bid for Teck.
A letter seen by the Board shows that the activist fund Palliser capital has increased pressure on Rio Tinto, asking it to launch a "now-or-never" counterbid to acquire Teck Resources. The letter urges Rio Tinto's dual listed structure to be unified and to spin off the base metals division to create a powerhouse in copper. In a letter dated October 17, Rio shareholders Palliser and Palliser encouraged the company to contest Teck's merger agreement with Anglo American in order to gain control over a copper portfolio of tier one that could produce combined 1.3 million tons of copper a year. Palliser, which according to sources in the know, holds a stake of $400 million, or less that 1%, in the miner confirmed the authenticity but declined to comment. The letter stated that the deal would diversify Rio's business beyond iron ore and unlock cost synergies of at least $800,000,000. It also said it would accelerate the copper growth for a decade, at a lower cost and risk than if the miner had expanded greenfield, thus better positioning Rio to take part in the global transition towards clean energy. In response to the letter Rio Tinto said it was focused on "maximising value for shareholders" and would provide an update on the strategy at its Capital Markets Day five weeks later. Shareholders had rejected the arguments Palliser made in support of its dual listing. A LETTER STATES THAT ENDING THE DUAL LISTING IS NECESSARY TO MERGE Palliser’s plan to counterbid Teck would see Rio, which is currently listed in both London and Sydney, unify and become a holding company in Australia. It would then split into two companies: one focusing on copper, aluminum and zinc in Canada and the other concentrating on iron ore. The shareholder, who has been campaigning for more than a year for Rio to be unified, stated in the letter that the dual-listed company structure makes an offer based on stock for Teck "structurally impossible", forcing the miner to expensive or dilutive alternative. The letter stated that "unification is not an option - it's a requirement for any credible strategic alliance", and urged the board to move quickly before the AngloTeck tie-up was finalised. A LETTER ALSO URGENT DEMERGER The company said that a split into two separate entities would release trapped value and attract investors looking for pure-play copper stocks. It said that Rio Tinto could make a more attractive offer with a premium up front, and also allow Teck shareholders to take part in Rio Tinto’s potential re-rating, as FutureMetalsCo will be demerged. Anglo and Teck have agreed to merge, without offering a premium for shareholders who will vote the deal on 9 December. Sources close to the issue said Palliser holds a small shareholding in Canadian miner. The fund didn't respond to an inquiry for comment about that holding. Rio's 2025 Annual General Meeting saw shareholders vote overwhelmingly against Palliser’s proposal to review the dual listed structure. They sided with the board. Palliser's suggestion that a unified list would provide greater flexibility in large M&A deals was not taken into consideration by the miner's boards at the time. Rio Tinto said Monday that it "strongly rejects" all the unfounded claims made by Palliser about the quality of the analysis presented to shareholders. Clara Denina, Jan Harvey (Editing and Reporting)
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After a year, the leader of Spain's Valencia Region resigns due to deadly floods
Carlos Mazon, leader of Spain's eastern Valencia Region, announced on Monday that he would be stepping down due to the way his administration handled the catastrophic floods which swept through the region one year ago. Mazon is under constant pressure to resign, especially from the relatives of victims, ever since the torrential rains on October 29, 2024, which killed 229 and caused billions in damages in Valencia, Spain's 3rd largest city. Mazon said to reporters that he "can't continue anymore" after an intensely critical speech where he criticized the response of the national government to the crisis. He didn't say whether he would call a snap vote, or if he would also resign from his regional assembly seat - ending his parliamentary immunity. Nor did he specify who his interim replacement will be. Residents in the affected area accuse the regional authorities of having issued an alert too late, after many buildings had already been submerged and people drowned in the worst floods in Europe since 1967. Mazon resigned on the day Maribel Vilaplana - a journalist in the area with whom he had lunch the day before the floods - was scheduled to testify at a hearing investigating the criminal liability of authorities for the deaths.
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China reduces gold tax exemptions for certain retailers, which could curb purchasing
China has ended its long-standing policy of tax exemption for certain gold retailers, which could set back the buying spree in the world's largest consumer market. Beijing will reduce the value-added taxes on gold sold by retailers to consumers, which was purchased at the Shanghai Gold Exchange and Shanghai Futures Exchange. The exemptions will be reduced to 6% as of November 1. This is according to the new policies published on Saturday by the Ministry of Finance. The lower exemption will be valid until December 31, 2027. Joni Teves is a strategist with UBS in Singapore. She wrote a note Monday stating that she expects gold prices to rise due to the increased tax being passed onto consumers. According to the new rules, VAT exemptions on standard gold traded on exchanges remain in place. The new tax regime comes amid a rush of gold purchases around the world, particularly in China. Consumers have lined up at retailers to purchase jewellery. Gold's price rose to a record of $4,381 per ounce on 20 October as a result of the buying. On Monday, spot gold prices briefly fell below $4,000 per ounce. They were last trading at that level. Prices have fallen about 9% from the record high. On Monday, shares of gold jewellery retailers Laopu Gold, Chow Tai Fook, and Zijin Mining all fell by as much as 9% or 12%. Gold miners Zhongjin Gold and Zijin Mining each dropped by as little as 2%. The value-added exemption on platinum for China Platinum Company was also removed last month. This also began on November 1. Reporting by Dylan Duan; Li Gu and Lewis Jackson, Editing by Christian Schmollinger
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Ten-year high in resource disputes between states and investors
DLA Piper, a law firm, said that disagreements between governments and investors about resources have reached a ten-year high. This is due to resource nationalism, and the growing competition between China and the U.S. for vital minerals. The scramble to find minerals is reflected in the race to get the precious oil and gas revenue that is vital to state coffers. This is especially true for emerging economies. DLA Piper reported that the 32 disputes filed with the World Bank's arbitration body so far this year, which include everything from gold, uranium, and lithium to oil and gas, have already exceeded those of last year. As their value became more evident, states felt the need for greater control over any deposits within their borders of critical minerals, said Gabriela Alvarez Avila, DLA Piper's partner and coleader of international arbitrage. DLA Piper's database analysis of the International Centre for Settlement of Investment Disputes revealed that 17 of the cases involved oil and gas assets. Colombia is the country with the most disputes (11 in total), and has four. Last year, Colombian President Gustavo Petro designated several mining zones as temporary natural reserve, banned fracking, and threatened to stop coal exports to Israel. This caused tension with investors. Mexico, which will nationalise lithium in 2022 and Ecuador, Panama, and Mexico all had two cases. DLA Piper didn't break down the specific disputes. Africa has ten disputes involving Niger, Tanzania the Democratic Republic of Congo Mali Morocco Senegal. Many countries and investors are interested in the DRC because it is home to critical minerals such as cobalt and copper. The United States in particular has said it is open to exploring critical minerals partnerships in the DRC after a Congolese senator contacted U.S. officials to pitch a minerals-for-security deal. AVZ Minerals, based in Australia, said that a new agreement between Kinshasa (the country) and KoBold Metals (a U.S. company), to develop a part of a Lithium project, violated a ruling by an international arbitral tribunal. DLA Piper's study found that the majority of disputes remained in Europe and Central Asia.
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Gold gains as the dollar weakens, but Fed expectations and trade optimism limit gains
Gold prices rose on Monday, as the dollar remained just below the three-month highs reached last week. However, reduced expectations of further Federal Reserve rate reductions in December and eased U.S. China trade tensions limited gains. As of 0627 GMT, spot gold rose 0.3% to $4,014.59 an ounce. U.S. Gold Futures for December Delivery rose 0.7% to $4.025.10 an ounce. The U.S. Dollar Index was down by 0.1% compared to its rivals. This makes greenback priced bullion more affordable for holders of other currencies. Kelvin Wong, senior market analyst at OANDA, said that the gold price has increased because of the dollar's strength, which has stabilized in today's Asia trading session. The U.S. Fed reduced interest rates on October 29, for the second time in this year, by 25 basis points. However, Chair Jerome Powell’s hawkish remarks cast doubt on whether there will be further rate reductions in 2025. CME's FedWatch Tool shows that traders now give a probability of 71% for a rate reduction in December. This is down from 90% before Powell's remarks. Gold that does not yield is a good investment in low interest rate environments and economic uncertainty. Investors are watching other economic indicators, such as the ADP U.S. Employment Data and ISM PMIs, this week to see if they can change the Fed's hawkish position. The safe-haven strategy has decreased at this time due to the de-escalation in U.S.-China tensions. Wong suggested that it could be the rotation to a more risky play in equities, which is why gold hasn't seen a major upward trend. Last week, U.S. president Donald Trump agreed with China to reduce tariffs in exchange for Beijing's concessions on the illicit fentanyl market, U.S. soya purchases, and rare-earths imports. Other metals rose as well. Spot silver increased by 0.6%, to $49.92 per ounce. Platinum climbed by 2.3%, to $1604.21, and palladium gained almost 1%, to $1447.08.
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China's iron ore prices fall due to declining steel production and rising inventories
Iron ore prices weakened on Monday due to a decline in steel production in China and rising port inventories. There was also concern about a weakening of downstream demand. The January contract for iron ore on China's Dalian Commodity Exchange(DCE) dropped 1.82%, to 782.5 Yuan ($109.86) per metric ton. As of 0700 GMT, the benchmark December iron ore traded on Singapore Exchange was 1.59 % lower at $104.45 per ton. According to Mysteel, the capacity utilisation rate at Chinese blast-furnace steel producers fell by 1.3 percentage point to 88.6% on average, for the fifth consecutive week between October 24-30. Mysteel's data shows that the daily hot metal production, which is a measure of iron ore consumption, fell 1.5% from one week to another, reaching 2.36 million tonnes. Everbright Futures, a Chinese broker, predicted that overseas supply would continue to improve in November. Shipments and arrivals are expected to increase. Analysts from Galaxy Futures stated that while domestic steel production may improve in the fourth quarter of this year, the main issue is the rapidly declining end-user demand for iron ore. As part of China's government pledge to reduce the overcapacity, China's steel association, which is backed by the state, announced that its steel production would drop below 1 billion tonnes in 2025. SteelHome data shows that the total iron ore stocks across Chinese ports increased by 1.53% in a week to 135.6 million tonnes as of October 31. Coking coal and coke, which are both steelmaking ingredients, have also lost ground. They fell by 0.85% and 1.17 percent, respectively. All steel benchmarks at the Shanghai Futures Exchange declined. The price of rebar fell by 0.96%. Hot-rolled coil dropped 0.6%. Stainless steel declined 0.36%. Wirerod was flat. ($1 = 7.1230 Chinese yuan) (Reporting by Lucas Liew; Editing by Subhranshu Sahu)
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Peacock: ROI-Spain teaches Europe about modern economics
Spain continues to be the fastest-growing economy in the Eurozone, and has outperformed its peers again in the third quarterly. The Iberian nation's successful mix of policies offers lessons that are at odds with global political trends. Spain's economy has grown by 0.6% in the last three months, a rate slightly lower than the previous quarter but still well above the 0.2% for the Eurozone as a group. This continues a trend of positive growth over the past few years. The International Monetary Fund has recently ranked Spain the fastest-growing advanced country, increasing its growth forecast for 2025 to 2.9% after a 3.5% increase in 2024. This is well above the 1.2% 2025 forecast of the entire bloc. The healthy growth in Spain has contributed to a reduction of the debt/GDP, which dropped from 119% to 102% in 2018. The IMF predicts this ratio to fall into double digits in 2030. Many of Spain's EU counterparts are watching this trend with envy. It's a far cry compared to the early 2010s, when the country suffered a housing bust and an existential banking crises. What is the reason for this dramatic change? Tourism boom, effective use of recovery funds from the pandemic era, and an emphasis on high-value service have all played a key role. Spain's high level of targeted immigration is another key growth driver. This comes at a time when many EU nations want to reduce migration. SMART IMMIGRATION Spain is unique in Europe for promoting immigration as a positive. According to the Elcano Royal Institute, net international migration was responsible for the majority of Spain's 8.2 million population increase between 2000 and 2024. The institute stated that without net international migration, Spain's population would have grown by only a few thousand people. In an interview with The Guardian, Prime Minister Pedro Sanchez proclaimed this fact, stating that immigration accounted for 25% of Spain's GDP per capita and 10% of social security revenue, but only 1% of the public expenditures. Fitch, a credit rating agency, says that immigration has helped increase Spain's potential growth (the rate at which the economy can expand without causing inflation) to 2.0%. Banco de Espana (the country's central banking institution) says that Spain's recent migration has had a positive impact on the economy because it was geared toward skilled workers in sectors with bottlenecks. Spain has been able tap into a large pool of Spanish-speaking Latin American workers. Spain is a good example of how low productivity can be a burden on the major European economies. Green Boss Spain's sun-drenched weather is a key asset in its search for growth. It lends itself well to renewable energy. Spain is aiming to be carbon neutral by 2050. According to the International Energy Agency (IEA), its massive investments in solar, wind, and renewable hydrogen should boost employment, research and development, and growth in the next years. Spain has already reaped some benefits from its green drive, with some of the lowest wholesale prices for electricity in Europe. Spain, Europe's second largest car producer, has attracted major investments, including from Germany and China, Chery and CATL, after announcing in 2020 a 5-billion euro plan to attract the electric vehicle and battery manufacture. It is reported that BYD may also be interested. There have, however, been some bumps in the road. In April, Spain experienced the biggest blackout Europe has seen in over two decades. Although there's no evidence that the increased use of renewable energy was to blame, it is likely the result of the country failing to adapt its power infrastructure in order to keep pace with the rapid energy shift. STUMBLING BLOCK Madrid's policy mix may change in the next few years. Spain is not immune to the global trend of dissatisfaction towards the government. This is for a number of good reasons. Many Spaniards have been shut out of the housing markets due to high property prices. Even though unemployment is at levels not seen since 2008 almost 2,5 million people remain unemployed. The government is also facing corruption allegations which it denies. Recent opinion polls show that the next elections are due in 2027. Sanchez's ruling PSOE is lagging behind centre-right PP, but by a very small margin. Spain's decade-long history shows, despite all the rhetoric to contrary, that it is possible for Europe to increase productivity and to slow down negative demographic trends. It remains to be seen if other European countries will heed this message. The views expressed are those of Mike Peacock. He is a former director of communications for the Bank of England, and former senior editor of. This column is a great read! Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn and X.
Malaysia PM says $142 Million magnet plant will boost rare earth industry, reports state media
State media reported that Malaysian Prime Minister Anwar Ibrahim stated that the development of a 600-million-ringgit ($142-million) super magnet production facility in Pahang would strengthen the nation's rarity earth sector.
In July, Australia’s Lynas Rare Earths signed a contract with South Korea’s JS Link to build a 3,000-tonne neodymium magnetic manufacturing facility near Lynas’ advanced materials plant located in Malaysia’s Kuantan District.
Anwar told state news agency Bernama that Malaysia's Trade Minister would monitor the project, as it involves rare earth processing.
Anwar stated that "JS Link already bought the land and is ready to start operations. This is no longer a Memorandum of Understanding." The investment has been made, and the land is prepared, so it's about speeding up the process.
Anwar stated that the collaboration would help Malaysia to become a leader in advanced materials and clean technologies, as well as support efforts to create a supply chain of critical minerals.
According to government estimates Malaysia has 16.1 million tons of rare earths deposits but lacks the technology required to mine and process these. The country seeks foreign investment to mine and process rare earths.
Rare earths play a vital role in the production of high-tech products, such as electric vehicles, semiconductors, and missiles.
Malaysian officials are reportedly in discussions with China about rare-earth processing. Last month, they signed an agreement with the United States to seek cooperation for diversifying their critical mineral supply chains.
(source: Reuters)