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Iran talks and lower bond yields set gold on course for its largest daily increase since February
The gold price rose to its highest level in nearly seven weeks on Wednesday and was on track to post the largest daily increase since February due?to lower Treasury rates and hopes of progress regarding opening the Strait of Hormuz. By 11:04 am, spot gold had risen 4.4% per ounce to $4256.85. The spot gold price rose 4.4% to $4,256.85 per ounce at 11:04 a.m. ET (1504 GMT), after reaching $4,258.99 - its highest level since June 18 - and breaking above the 50 day moving average. It now stands at $4,160. U.S. Gold Futures for December Delivery rose by 4% to $4317.40. The early adopters have returned to precious metals, as the probability of rate increases has decreased since last week. The dollar is down sharply, which helps. "The Iran pause also helps," said Tai Wong an independent metals dealer. The dollar fell to six-week-lows against other major currencies and the yield on U.S. 10 year notes was at one-week-lows. President Donald Trump had said that his administration held "very good talks" with Iran in a full-day of negotiations. This fueled hopes that?the five month conflict might be approaching. Gold is down by 24% from its record high of $5 595 in January, and 19% since the beginning of the Iran War, which fueled concerns about energy inflation, and reinforced bets for interest rate hikes. According to the World Gold Council, the demand for gold by central banks in the first half of 2026 will be the lowest it has been since 2022. The World Gold Council reported that the outflows of gold-backed exchange traded funds totalled 45 tonnes in the second quarter. This was when bullion experienced its steepest quarterly decline since 2013. J.P.Morgan stated in a recent note that with central bank purchases?muted?, retail interest elsewhere focused and subdued demand for physical gold in Asia, the rates-sensitive ETF is now the main driver of gold prices. Wong stated that "for the metals industry to really gain steam, rate cuts must be priced in, but for now, this is a story of 2027 at the very earliest." Silver spot rose 4.9%, to $62.44 an ounce after reaching its highest level since the 6th of July. Palladium rose 1.6% to $1.374.75, while platinum remained at $1.735.28. The prices are the highest they have been since June 17th and June 2nd, respectively. Standard Chartered's Suki Cooper said that "Platinum & palladium has priced in many headwinds" since the beginning of the conflict. These include concerns?over a slowing in auto production, a growing market share EVs & the potential for recycling growth. She believes that platinum will be in short supply this year, and palladium will become a surplus by 2026. (Reporting from Sukanya Mittra and Noel John, in Bengaluru; and Polina Devitt, in London. Additional reporting by Anjana Anil. Editing by Shailesh Kumar and Joyjeet Das.
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Gold jumps over 3% due to weaker dollar. Eyes on Mideast developments
Gold prices jumped by over 3% in?Wednesday's trading, mainly due to a weaker dollar. The?dollar fell and Treasury yields dropped, as markets watched developments in the Middle East to get fresh signals about inflation and interest rates outlook. By 09:44 am EDT (1344 GMT), spot gold had risen 3%, to $4199.78 an ounce. Bullion reached its highest level since the 22nd of June earlier in the session. U.S. gold futures increased 2.6% to $4260.80. Tai Wong is an independent metals dealer. He said, "Two consecutive days of lower yields combined with a week of softer dollars seem to have cleared the way for gold and silver." The U.S. Dollar was at its lowest level against the Japanese currency since?three months. This made dollar-priced gold more affordable to overseas buyers. Meanwhile, yields on U.S. 10 year notes were hovering?near a one-week-low. The ADP National Employment Report showed that the growth of private payrolls in the United States slowed down in July. Payrolls increased by 44,000, which was below what economists expected, who had predicted a gain of 70,000. In an interview with CNBC, Minneapolis Fed President Neel Kahkari said that he believed now was the right time to begin slowly increasing interest rates. According to the CME FedWatch Tool, traders?are pricing in about a 57% probability of a rate increase at the central bank's meeting on September. Due to its non-yielding characteristics, higher interest rates may reduce the appeal of bullion. Donald Trump, the U.S. President, said that his administration has had "very positive discussions" with Iran. This fuels expectations for a quick end to this five-month conflict. Spot'silver' rose by 4.2%, to $62.05 an ounce. Platinum gained 0.5%, to $1.725.58, reaching its highest price since June 17. Palladium also climbed 0.5%, to $1.359.80 and reached its highest price since early June. (Reporting by Sukanya Mitra in Bengaluru; Editing by Shailesh Kuber)
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The Russian central bank claims that higher fuel prices in Russia have accelerated the consumer price increase
The Russian central bank published the minutes of its July 24 meeting on Wednesday. They stated that higher fuel prices in Russia accelerated the consumer price growth in June by 0.3% and by 0.2% in the first half. After Ukrainian drone attacks on oil refining facilities disrupted the supply, Russians experienced a 'fuel shortage across all 11 time zones of the country. This led to long queues, higher gas prices, and rationing in some regions. Authorities say that the?situation? has stabilised?in many areas. Central bank officials said that the total direct and indirect impact on inflation of the fuel price increase will not exceed 1.5% for the entire year. The benchmark interest rate was cut to 14% from 14.25% on July 24, despite an 'inflation spike linked to Ukrainian drone strikes on major oil refineries and ecommerce warehouses. The regulator stated that most?board members thought there was room for more rate cuts in this?year, although the scope had shrunk. Reporting by Elena Fabrichnaya, Writing by Anastasia Teterevleva, Editing by Andrew Osborn
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TAE, a developer of fusion energy, signs an agreement for future fuel supply options with helium-3
TAE Technologies, a developer of fusion energy, announced on Wednesday that it had signed a deal with Black Moon Energy, whose private company could 'provide helium-3 as a fuel option in the future for its planned power plant. Nuclear fusion is still a long way from commercial power plants. Developers are still trying to prove the performance of reactors, attract capital, and ensure long-term supply. TAE has raised over $1 billion from Alphabet, Google, and Chevron. It is planning to build its first fusion plant, Da Vinci. The power plant will be able to generate 50 megawatts of electricity. Site selection is planned for later this year and operations are expected to start in 2031. The company stated that future power plants will be designed to produce between 350 and 500 megawatts. According to the companies, this agreement also includes collaboration in commercial development. Michl Binderbauer, TAE's chief executive officer, said that the agreement could offer a "alternative fuel supply option" as the company transitions to commercial power generation. Trump Media announced in December that it would acquire TAE through an all-stock transaction valued at more than $6 billion. This deal would create a publicly-traded fusion-energy firm. In 'June, the companies had planned to spin-off Trump Media's legacy business in social media, including Truth Social, and other assets into a separate listed entity. The Foothill Ranch, California-based firm expects to file merger-related documents to U.S. regulators, and complete the transaction by the end of 2026. This is subject to regulatory approvals, and other closing conditions.
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India eyes Venezuela blocks operatorship; regains Russia's Sakhalin-1 stake
India's Oil and Natural Gas 'Corp (ONGC) hopes to sign agreements soon with Venezuela 'to operate two oil 'blocks under the South 'American nation's 'new petroleum 'law', its finance chief'said 'on Wednesday. ONGC Videsh (ONGC Videsh is the overseas investment arm of the state-run ONGC) holds a stake of 40% in the San Cristobal oil field, and along with other Indian firms, a stake 18% in the Carabobo-1 Project. "Now, we are able to work freely on Venezuelan projects." We had restricted our operations in Venezuela because of sanctions-related risks," said finance director Anupam agarwal on a?analyst's call following the company's earnings for the June quarter. He said Venezuela offered additional incentives under its 'petroleum laws' and that ONGC was experienced in 'operating fields of similar geology? in India. He said, "We are taking over operatorship of some projects from PDVSA, we believe we will soon see positive developments." RUSSIAN SKHALIN-1 ASSET Agarwal stated that ONGC regained their 20% stake in Russia's Sakhalin-1 project for oil and gas after a four-year gap. He said that the restored stake increased the group's revenue contribution to the project from 5 billion to 6 billion rupees. After the West imposed broad?sanctions against Moscow in response to its invasion of Ukraine, Sakhalin-1 was transferred by Russia to a new domestic operator. ONGC has agreed to pay?payments to the Sakhalin-1 Abandonment Fund?in roubles, using dividends that have been frozen in Russia. This will allow it to keep its 20% stake, as was reported last year.
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India eyes Venezuela blocks operatorship; regains Russia's Sakhalin-1 stake
India's Oil and Natural Gas 'Corp (ONGC) hopes to sign agreements soon with Venezuela 'to operate two oil 'blocks under the South 'American nation's 'new petroleum 'law', its finance chief'said 'on Wednesday. ONGC Videsh (ONGC Videsh is the overseas investment arm of the state-run ONGC) holds a stake of 40% in the San Cristobal oil field, and along with other Indian firms, an 18% share in the Carabobo-1 Project. "Now, we are able to work freely on Venezuelan projects." We had restricted our operations in Venezuela because of sanctions-related risks," said finance director Anupam agarwal on a?analyst's call following the company's earnings for the June quarter. He said Venezuela offered additional incentives under its 'petroleum laws' and that ONGC was experienced in?operating similar geology - fields?in India. He said, "We are taking over operatorship of some projects from PDVSA." We believe that we will soon see positive developments. The new agreements have been signed. RUSSIAN SKHALIN-1 ASSET Agarwal stated that ONGC regained their 20% stake in Russia's Sakhalin-1 project for oil and gas after a four-year gap. He said that the restored stake increased the group's revenue contribution to the project from 5 billion-6 billion rupees per quarter, up to a total of?10 billion Indian?rupees (about 105.13 millions dollars). After the West imposed broad?sanctions against Moscow in response to its invasion of Ukraine, Sakhalin-1 was transferred by Russia to a new domestic operator. ONGC has agreed to pay?payments to the Sakhalin-1 Abandonment Fund?in roubles, using dividends that have been frozen in Russia. This will allow it to keep its 20% stake, as was reported last year.
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Reliance's luxury unit brings Kim Kardashian SKIMS to India
Reliance Brands is the luxury retail arm of Reliance Retail. They have partnered with Kim Kardashian's SKIMS in order to bring this shapewear brand into India. This comes as global companies race to enter India's growing fashion and beauty market. The company, which is a subsidiary of Mukesh-Ambani's Reliance Industries, said that it would launch the SKIMS name across both physical and digital channels?starting in Delhi and Mumbai. Indian beauty retailers are racing to introduce international brands into the country as Gen Z and younger consumers gravitate towards global trends in beauty and brands backed by celebrities, thanks to social media. This year, Indian beauty and fashion retailer Nykaa teamed up both with Selena Gomez’s Rare Beauty as well as Shiseido Group’s NARS Cosmetics. SKIMS is a new partnership that will add to Reliance Retail’s growing portfolio of foreign brands, including Rihanna’s Fenty Beauty, Fenty Skin and designer brands like Stella McCartney and Valentino. The entry of SKIMS comes at a time when India's shapewear industry is booming, with a mix?of?homegrown direct to consumer brands, such as Underneat, competing for customers. SKIMS, founded in 2019, has recently opened'stores in London and Dubai after raising $225m in funding which valued the company at 5 billion dollars.
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Phillips 66 surpasses its quarterly expectations as the Iran War boosts US refining profits
Phillips 66'reported a nearly 4-fold increase in'second-quarter profits on Wednesday, crushing Wall Street expectations, as the Middle East conflic? squeezed global fuel suppli?es and sent U.S. refinery margins soaring. The Iran War has been a boon to U.S. refiners, as buyers from around the world have scrambled for alternative fuels amid fears of disruptions in Middle Eastern exports. Fuel exports from the United States have reached record levels, especially for diesel and other refined fuels. Phillips' refining segment reported a record jump in earnings adjusted to $3.09 Billion from $392 MILLION a year ago. The?realized profit margin? in the second quarter?more than?doubled from a year ago to $24.08 a barrel. The company's quarterly net profit was $3.85 billion. This is its highest quarterly profit since the 2022 Russian invasion of Ukraine, which disrupted global supply chain and increased refinery earnings. In premarket trading, shares of the company increased 1.4% to $208,67. Phillips 66’s renewable fuel segment reported a quarterly adjusted profit of $544 million compared to a loss of $133 millions a year ago. After years of margin pressures, U.S. refiners have begun to see better returns on renewable fuels. This is due to a recent rise in the blending of biofuels mandates as well as a rise in diesel prices related to the Middle East conflict. According to data compiled and published by LSEG, Houston-based Phillips 66 posted an adjusted profit of $9.41 for the three months ended June 30 compared to analysts' average estimates of $7.44.
McGeever: Investors are hearing Powell clearly because Treasury yields have plunged.
The decline in Treasury yields against the backdrop of record stock prices, tight spreads on credit and persistent inflation suggest that investors have accepted Federal Reserve Chairman Jerome Powell's view that policy is driven by employment rather than inflation.
There's even a danger that a feedback loop could take hold whereby concerns about the labor market depresses yields and exacerbates fears of an economy slowing down, which in turn could maintain downward pressure on the yields.
CPI inflation, a rare indicator of economic growth, will be released on Friday to investors who have been deprived of official data for three weeks due to the government shutdown. It's just not what they wanted.
The report due on Friday is expected to reveal that the core annual inflation rate remained at 3.1% for September. This is more than a point higher than the Fed's target of 2%. Since nearly five years, the annual core CPI is at 3% or more almost every month.
Bond market will likely shrug this off. Last week, the yield on two-year Treasury bonds fell to its lowest level since August 2022. This reflects investors' beliefs that the Fed would cut rates again next weekend, in December and even into next year. The 10-year yield has fallen below 4.00% and reached its lowest closing daily level in over a year.
Even if the inflation rate is on the higher side, it's unlikely that this will cause a spike in yields.
ASSESSING THE FRAGILIOUS LABOR MARK
Investors have filled in the blanks with their own doomsday scenarios, as there were no official economic statistics during the three-week shutdown of the government.
The slump in employment growth is what they have been wallowing over. The dramatic decline in job creation, which has been mostly offset by the shrinking labor pool until now, is alarming.
Goldman Sachs economists outlined on Monday five reasons for the rapid decline in job creation: a slowdown of immigration, a reduction in government hiring and funds, adoption of artificial-intelligence technology; tariffs and trade uncertainty as well as costs related to tariffs; and macroeconomic risk.
The underlying trend in payroll growth is now 25,000 per month, 125,000 less than the projections made in January. This is also below the "breakeven pace" of job growth required to stabilize unemployment, which was estimated at 75,000.
This is on the higher side of estimates for breakeven. Anton Cheremukhin of the Dallas Fed estimates it at 30,000. This is down from 250,000 just two years ago.
A low level of break-even job growth can help keep the unemployment rate down, but masks an even greater fragility on the labor market. Net job growth can quickly turn into job losses if the economy deteriorates.
MESSAGE IN BARREL
The Fed is well aware of this danger. Chair Powell indicated last month that fear of a rapid deterioration of the labor market was the main reason for the decision to continue cutting interest rates, even when inflation exceeded the 2% target.
Investors and the Fed may both have other reasons for looking past the inflation rate that is still high.
One is the signals from the oil markets. The link between the crude oil price and inflation may be weaker now, but that doesn't mean it should be ignored.
Brent crude is near $60 per barrel, and oil prices are at a five-month low. This is down about 15% compared to the same time last year.
The majority of energy analysts, such as those at the International Energy Agency (IEA), predict a persistent imbalance in supply and demand for the coming year. This is due to both increased production and weakened demand.
If Eurasia Group analysts have it right, the glut could drive prices down to $55 per barrel by the end this year. This would be a 5-year low.
Oil prices that are moderate have been exerting downward pressure on the inflation rate almost all year. Although cheaper crude oil won't help inflation reach the Fed's target of 2%, it can explain why investors and the Fed have turned their attention away from inflation towards the deteriorating labor market.
(source: Reuters)