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Gold falls as tensions between the US and Iran spark inflation and rate hike concerns
Gold prices fell on Monday, as renewed tensions between the U.S. and Iran?lifted oil prices?and sparked inflation fears. This boosted expectations for higher interest rates. By 2:00 pm, spot gold had fallen 1.7% to $4.020.68 an ounce. ET (1800 GMT), following a fall of more than 2% in the earlier session. Last week, gold had hit a seven-month low. U.S. Gold futures for August delivery were 1.4% lower, at $4.038.9. The market is still adjusting to the Fed's more hawkish stance, said Peter Grant, vice president and senior metals analyst at Zaner Metals. Iran fired missiles and drones on Sunday at U.S. military bases in 'Kuwait' and 'Bahrain, just hours after U.S. president Donald Trump had threatened to wipe out the Iranian leadership if they failed to abide by the final peace deal. Brent crude futures climbed following the attacks. Gold is traditionally regarded as a safe-haven metal, but the higher energy costs due to the war has raised fears of inflation and increased interest rates. This would put pressure on the non yielding metal. The U.S. Federal Reserve kept interest rates steady this month. However, policymakers are expecting a rate hike in the second half of this year due to growing concerns over inflation that is above the 2% target set by the U.S. Central Bank. The U.S. Dollar was on its way to the biggest monthly gain it has seen in almost a year. Gold becomes more expensive to overseas buyers when the?dollar is stronger. Market participants are now awaiting ADP employment data, which will be released on Wednesday, and U.S. Nonfarm Payrolls Data on Thursday to get more clues about the Fed's monetary policy stance. Grant said that "(Gold's) price could fall to new lows, if employment data continues to look strong. This would support the Fed's position of keeping rates higher for longer." The traders are pricing in a 63% chance that interest rates will rise in September. Silver spot fell 1.6% per ounce to $58.19, while platinum declined 2.1% to $1.580.45. Palladium rose 1.1% to $1222.24. (Reporting by Sukanya Mitra in Bengaluru; Editing by Joyjeet Das, Chris Reese and Vijay Kishore)
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Proxy advisors win third legal victory to stop Republican anti-ESG rules
A federal judge granted a preliminary order on Friday, blocking an Indiana law that requires new disclosures by proxy advisers. This is the third legal victory for Institutional Shareholder Services (ISS) and Glass Lewis in their fight against Republican legislators' restrictions. Both firms offer advice on how shareholders can vote at annual corporate meetings. Republican politicians have long been sympathetic to business concerns about executive compensation. Recently, they have also claimed that the firms favor shareholder resolutions that focus on environmental, governance, or social (ESG) issues like climate change and workforce diversity. Three recent cases where proxy firms gained the upper-hand - Indiana, Kansas and Texas this month - suggest that these efforts are still slow-moving. Indiana's law, which is set to come into effect on July 1, required firms to submit a written financial analysis of their reasoning if they recommended voting against management. Supporters said that it was necessary to keep the advice focused on financial results. The two firms, in separate filings, alleged that the law violated their rights. This included their right to freedom of speech. Matthew Brookman was the U.S. District Judge for the Southern District of Indiana on Friday. He agreed, among others, with plaintiffs that the law amounts to "viewpoint discrimination", because it only imposes burdens if proxy firms disagree with the management. Indiana Attorney General Todd Rokita's representatives, who were defending the law and defended it, did not reply to comments. In a press release, ISS praised Brookman for his decision to overturn a law that it called an "unconstitutional exercise in power over the market." The firm cited other similar federal rulings which blocked efforts to rein in proxy advisors in Kansas and Texas. In the last year, Texas, Kansas and Indiana courts have granted preliminary orders barring?states from enforcing similar laws that were pushed by advocacy groups. This latest decision is further 'evidence' that states?cannot impose onerous requirements on proxy advisors for simply making recommendations that don’t align with company management,' ISS stated. Glass Lewis' spokesperson confirmed via email that it was pleased with the recent decisions. This person stated that "These rulings protect core First Amendment principles, rejecting speaker and viewpoint discrimination, and ensure we can deliver the objective research our clients expect." The federal court cases in?Kansas and Texas remain pending. ISS and Glass Lewis?also?sued a Kentucky similar rule to stop enforcement. Florida sued ISS and Glass Lewis separately over allegations of consumer protection and antitrust, which they both deny. ISS has vowed that it will fight similar lawsuits in four other states.
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Gold falls as tensions between the US and Iran spark inflation and rate hike concerns
Gold prices fell on Monday, as renewed tensions between the U.S. and Iran?boosted?oil?prices and sparked inflation fears. This boosted expectations for higher interest rates. Spot gold fell 1.5%, to $4.025.83 an ounce at 12:12p.m. ET (1612 GMT), following a fall of more than 2% in the earlier session, and a recent low of more than seven months. U.S. Gold Futures for 'August Delivery' fell by 1.4% to $4 040.70. The market is still adjusting to the Fed's more hawkish stance, said Peter Grant, senior metals analyst at Zaner Metals and vice president. Iran launched drones and missiles on Sunday at U.S. military bases in Kuwait and Bahrain. This came after U.S. president Donald Trump had threatened to eliminate the 'Iranian leadership' if they failed to adhere to the terms of a final peace deal. Brent crude futures have risen following the attacks. Gold is traditionally viewed as a safe-haven metal, but the higher energy costs due to the war has raised fears of inflation and increased interest rates. This would put pressure on the non yielding metal. The U.S. Federal Reserve kept interest rates steady this month. However, policymakers are expecting a rate hike in the second half of this year due to growing concerns over inflation that is above the 2% target set by the U.S. Central Bank. The U.S. Dollar was on its way to the biggest monthly gain it has seen in almost a year. A stronger dollar makes gold expensive for foreign buyers. The market participants are now awaiting ADP's employment data, which will be released on Wednesday, and the U.S. nonfarm payrolls figures on Thursday to get more clues about the Fed's?monetary policy stance. Grant said that "(Gold's) price could drop to new lows, if employment data continues to look strong. This would support the Fed's policy of keeping rates higher for longer." Traders have priced in a 64% chance of an interest rate increase in September. Silver spot fell 1.8%, to $58.11 an ounce, and platinum dropped by 2.3%, to $1,576.90. Palladium rose 0.8% to $1.218.67. Sukanya Mitra in Bengaluru, Joyjeet Das & Chris Reese (Reporting and Editing)
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Short-dated yields are mostly higher, as crude prices rise; the focus now turns to employment data
The yields on short-term U.S. Treasury bonds were mostly higher Monday as crude prices increased following the?attacks? between the U.S. U.S. crude jumped 1.34%, to $70.15 per barrel. Brent went up to $72.77 a barrel, a 1.08% increase on the day, as the attacks threatened to undermine a fragile peace deal. However, expectations of continued energy shipping through Strait of Hormuz held gains in check. A source said on Monday that the Iranian and U.S. teams working on the implementation a interim peace agreement?are likely to meet in Doha within the next few days. This week will bring a series of labor market?data, culminating on Thursday with the Labor Department's June payrolls report. As expectations of inflation pressures easing have increased, yields have been declining in recent days. This has offset what was perceived as a hawkish Federal Reserve announcement and press conference on June 17 by the new?Fed chairman Kevin Warsh. Jim Barnes, Director of Fixed Income at Bryn Mawr Trust, said: "The data this week on the labor market is interesting to me, but now the focus is more on inflation." Because energy prices are down materially, inflation expectations have also dropped. The market, particularly after the Fed's meeting, is not satisfied. They need to see concrete evidence of inflation falling. BENCHMARK YIELDS HIGHER EDGE After falling for three weeks in a row, the yield on the benchmark U.S. Treasury 10-year note increased 0.4 basis points to 4.376%. Several Fed officials said last week they are still worried about high inflation. The yield on 30-year bonds fell 0.3 basis points to 4.862%. According to CME Group’s FedWatch tool the markets are pricing in a 29,4% chance that a rate increase of at least 25 basis points will occur at?the Fed’s July 28-29 Meeting and a 61,9% chance for September 15-16 Meeting. The yield on the two-year U.S. Treasury, which moves typically in line with expectations of interest rates from the Fed, increased 1.9 basis points, to 4.107%, and was on track for its 1st daily gain following 4 straight declines. The gap between the yields on two-year and 10-year Treasury bills, which is seen as an indicator of economic expectation, was positive by 26.7 basis points. The five-year U.S. Treasury inflation-protected securities (TIPS) brokeeven rate was 2.244%, after closing at a 2.223% level on June 26. The 10-year TIPS rate of breakeven was 2.215% last, which means the market expects inflation to average 2.2% per year over the next decade. (Reporting and editing by Paul Simao; Chuck Mikolajczak)
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Slovakia prepares final unit of Mochovce Nuclear Plant for production
Slovenske Elektrarne, the Slovak utility, has begun fuel loading on the fourth 'unit' of the Mochovce Nuclear Power Plant, nearing the?start of production after almost four decades of construction. The fourth unit, a 471 megawatt unit, will be the last unit to go online at the second nuclear power plant in the country after the grid connection of its third unit is completed in 2023. When the project was restarted last in 2008, it was originally planned that the fourth unit would be completed in 2013. The start-up of the nuclear power plant in Slovakia will mean that it has the highest percentage of nuclear energy in Europe's national power mix. Slovenske, which is majority owned by Czech investor Daniel Kretinsky’s EPH, has said that nuclear power will?cover 77.5% the country's need, ahead of France in terms of percentage. The completion of the project comes at a time when global?interest is growing in nuclear power amid a push to reduce carbon?emissions, and to ramp up production to meet the demands of electrified economies. This includes the surging demand for data centres. Branislav Stycek, CEO of Mochovce, said at a live news conference that the fourth unit would supply 13% to Slovakia's demand for electricity and solidify Slovakia's position as an electricity exporter. Officials said that after the fuel loading, a series tests will be conducted before the reactor and the turbine begin supplying fuel to?the power grid. Strycek stated that the unit would reach its full capacity at the end of this year. As with other nuclear power plants in Europe, the completion of Mochovce started in 1980 based on a Soviet design. However, it has run into a number of?delays and cost overruns. Fico stated that the government is interested in increasing the 34% stake it holds in "Slovenske Elektrorne" in a window for talks with the major owner following the commissioning of Mochovce's final unit. Separately, the government plans to build a 1,200 MW power plant with state oversight. (Reporting and editing by Jan Lopatka, Prague)
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Oil and stock prices rise as investors focus on Iran. The yen hits a 40-year low against the dollar
Investors tracked the implementation of the interim peace agreement between the U.S. and?Iran, while oil prices climbed?after tit for tat attacks highlighted the risk of escalation. European stocks edged down, but Wall Street led the gains. Technology shares rebounded after last week's saleoff, driven by concerns about AI spending. After several days of strike activity in the Middle East, both sides have accused each other of violating an interim ceasefire after an Iranian projectile struck a cargo ship in the Strait of Hormuz. The oil prices fluctuated, Brent and WTI both up by more than 1% in a single day but were still down sharply for the entire month. Recent U.S. attacks and Iranian attacks highlighted the fragility of interim agreement, while expectations of a recovery of energy shipments via the Strait of Hormuz cap gains. Mohit Kumar said that the market could benefit from the drop in oil prices, and the impact it has on the global economy. Lower oil prices will lead to diversification of trade, and sectors that are growth-sensitive should perform better. U.S. crude oil rose by 1.7%, to $70.41 per barrel. Brent increased to $72.88 a barrel. The Dow Jones Industrial Average rose by 302.53 or 0.58% to 52,175.22. The S&P 500 gained 37.66 or 0.51% to 7,391.68. And the Nasdaq Composite rose 205.04 or 0.79% to 25,497.22. The MSCI index of global stocks rose by 4.41 points or 0.38% to 1,107.01. There have been a number of false starts with?peace talks. Peter Andersen of Andersen Capital Management said that I expect the majority of market participants to "remain in a 'holding pattern' for the remainder of this week." The pan-European STOXX 600 fell by 0.1% while Europe's FTSEurofirst 300 fell by 2.18 points or 0.09%. The Nikkei 225 rose by 107.23 or 0.15 percent to 69.468.11 while the emerging market stocks gained 1.00 points or 0.06%. WAGE WAGERS FOR RATE INCREASE The dollar has risen as expectations of an upcoming Federal Reserve rate increase have boosted the dollar. Oil prices fell sharply over the past few weeks, but inflation measures have soared in the U.S. The dollar index which measures the U.S. against other currencies was slightly lower last week at 101.25. This is just below the 13-month peak it reached last week. The oil market is still a risky place. Participants still appear to be... focusing their attention on the impact of a continued rise in oil flow on global balance, according to ING analysts in a Monday note. This week, the U.S. economic focus will be on Thursday's June jobs report. Three consecutive months of stronger-than-expected payrolls have reinforced the ?Fed's hawkish shift, though any cooling ?in the labor market could prompt a more dovish reassessment. Investors have priced in at least one Fed rate hike this year. This is a dramatic change from the expectation of two rate reductions before the Iran War. Marc Chandler, Bannockburn Global Forex's chief market strategist, said that the labor market has accelerated. "The doves' concerns about the labor market slowing down seem to be over." The Japanese yen has hit its lowest level in 40 years, 161,97 per dollar. This is the weakest it's been since 1986. The Bank of Japan’s 25bp rate increase to 1.00%, which was long overdue, has not been able to reduce the interest?rate gap with the United States. This is especially true after the Federal Reserve maintained its hawkish stance by signaling that rates will likely remain high for longer. Gold was down by 1.3% to $4,034 an ounce, as the dollar rose. The yellow metal will experience a decline of 13% in the second quarter. This is its largest quarterly drop since 2013. Reporting by Ankur Baerjee from Singapore, Harry Robertson from London and Rodrigo Campos from New York. Karen Brettell, Alex Lawler and Karen Brettell contributed additional reporting. Editing by Aidan Lewis (with Andrew Heavens, Mark Potter and Aidan Lewis).
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Gold falls as tensions between the U.S. and Iran spark inflation and rate hike concerns
Gold prices fell on Monday as fresh tensions between the U.S. and Iran pushed up oil prices, fueling inflation fears. This boosted expectations for higher interest rates. By 8:51 am, spot gold had fallen 1.03% per ounce to $4 045.95 ET (12:51 GMT) while U.S. Gold Futures for August Delivery fell. Prices fell to a seven-month low last week. The market is still adjusting to the Fed's more hawkish stance, said Peter Grant. Iran launched drones and missiles on Sunday at U.S. military bases in Kuwait and Bahrain. This was shortly after U.S. president Donald Trump had threatened to eliminate the Iranian leadership for failing to adhere to the terms of the final agreement. Brent crude futures rose after the attacks. Gold is traditionally a safe-haven metal, but the higher energy costs due to war have led to concerns about inflation and rising interest rates. This would put pressure on gold, a non-yielding material. The U.S. Federal Reserve kept interest rates steady this month. However, policymakers are expecting a rate hike in the second half of this year due to growing concerns over inflation that is above the 2% target set by the U.S. Central Bank. The U.S. dollar is on track to post its largest monthly gain since nearly a year. A stronger dollar makes gold expensive for foreign buyers. The market participants are now awaiting the ADP employment data, which will be released on Wednesday, and the U.S. nonfarm payrolls on Thursday to get more clues about the monetary policy stance of the Fed. Grant said that "(Gold's) price could fall to new lows, if employment data continues to look strong. This would support the Fed's higher-for longer stance." The traders are estimating that there is a 60% chance of a rate increase by September. (Reporting by Sukanya Mitra in Bengaluru; Editing by Joyjeet Das) (Reporting by Sukanya Mitra in Bengaluru; Editing by Joyjeet Das)
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Aluminum prices fall to a four-month low amid Middle East supply concerns
Aluminum prices dropped to a four-month-low on Monday as traders said that fears had eased about the possibility of a larger conflict arising from the weekend's tit-fortat strikes between Iran and the United States. Benchmark aluminium prices on the London Metal Exchange were down 1.9% to $3,119 per metric ton, from $3,104 earlier. The Strait of Hormuz talks between Washington and Tehran, which is a major shipping channel, will be resumed on Tuesday in Qatar. Britannia Global Markets stated in a report that "the situation is still fluid, and any new disruption could quickly tighten the availability of... aluminum." The suspension of the trade across the Strait caused a'significant disruption to the aluminium market. The Middle East is home to 9% of the global aluminum smelting capacities. This month, due to disruptions in supplies, prices reached $3,787.50, their highest level since March 2022. Prices of metals used in construction, transport and packaging have fallen by 16% since then. The 'premium' for the LME cash aluminium contract has fallen from its 19-year-high over the 3-month forward. Support for aluminum is at the 200-day moving median, which is currently around $3.160. On the upside, resistance is found at the 100-day Moving Average around $3.410. Metals prices in other markets are more expensive because of the dollar strength. The dollar is on track to achieve its biggest monthly gain in over a year. This is due to the growing likelihood of higher interest rates in the United States in order to curb inflationary pressures. Alastair Munro is a senior base metals analyst at broker Marex. He said that a hawkish U.S. rate backdrop first drove the selloff in energy and precious metal markets, before the industrial metals suite was under pressure last week. Lead?retreated by 0.1% to 1,901 while tin was little changed at $50540. Nickel lost 1.3%. This week, the manufacturing PMIs of China's top consumer will provide clues about demand for industrial metals. Reporting by Pratima Dasai, Editing by Mark Potter and David Goodman. Shreya biswas is the editor.
Police in Senegal fire tear gas on constitutional reform protesters
The Senegalese Police fired tear gas to disperse scores of protesters on Monday outside the parliament. This was as lawmakers discussed a constitutional amendment that critics say could upset the balance of power within government.
The proposed changes include a clause that prohibits a president in office from being the leader of a party.
A coalition of politicians supporting the President Bassirou Diomaye Faye called for an?immediate withdrawal?of this bill.
The change was approved by lawmakers on Monday, but any amendments must be subjected to a referendum first, according to the Minister of Justice, Moussa sarr.
The governing Pastef Party, led by Ousmane sonko (former prime minister and parliament speaker), has been pushing for constitutional reform.
Faye is also a Pastef member, but has no official role within the party. This amendment will make it harder for him to start his own political party before the next elections.
Sonko was ousted as Prime Minister by Faye in May.
Faye's disagreement with?Sonko over how to approach reforms, and?the way to deal with a growing debt crisis? has deepened political divisions.
Faye, a populist leader with a?strong youth following who was barred from running due to a conviction for defamation, was elected in 2012, supported by?Sonko. (Reporting and editing by Diadie B and Anait Miridzhanian, Jessica Donati, Aidan Lewis and Susan Fenton).
(source: Reuters)