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Gold falls to a seven-month low after dollar firms and rate hike bets increase
Due to the pressure from a stronger dollar and expectations of an interest rate increase, gold prices dropped to a seven-month-low on Wednesday. Gold spot fell 3.3%, to $3.973.79 per ounce at 2:00 pm EDT (1800 GMT), having hit its lowest level since 2025. U.S. Gold Futures closed 3.4% lower, at $4,008.80. Dollar-priced gold became more expensive to holders of other currencies as the U.S. currency firmed. After the U.S. Central Bank's latest policy meeting, traders have increased their bets that interest rates will rise in the U.S. this year. They are also concerned about inflationary pressures resulting from the Iran War. Tai Wong, a metals trader who is independent, stated that the'market pricing' a rate increase as early as September, due to a Fed that has become more hawkish, as well as a dollar surging at its highest level in 13 months, combined with lower inflation expectations, are placing heavy pressure on precious materials. He added that "for gold, there is support at just under $3.900, and central bank purchasing continues, so a crash is unlikely. However, expect a long period of consolidation, as the gold market is no longer in favor." When interest rates increase, gold becomes less appealing to investors because it does not offer a yield. Spot gold has lost more than 1,600 per ounce since it reached a record high of $5,594.82 at the end of January. ING analysts have cut their gold predictions. They now expect prices to average $4.300 per ounce during the third quarter in 2026 - and $4.600 for the fourth. This is compared to their previous projections which were $4.850 and $5,000 respectively. Investors?also await U.S. The Fed's preferred measure of inflation, Personal Consumption Expenditures, is due Thursday. Lukman Otunuga is a senior research analyst with FXTM. He said that more hawkish signals or economic data supporting the argument for higher rates could translate into further downside risks for gold. Silver spot fell 9.1%, to $56.41, after reaching its lowest level since Nov.?2025. Standard Chartered stated in a 'note' that silver is 'vulnerable to volatility in the near term due to outflows of exchange-traded commodities, but a market undersupplied suggests a recovery in price in the next few months. Palladium fell 6.8%, to $1153.68, and platinum dropped 5.5%, to $1560.72.
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Stocks recover as Dollar rises to an all-time high
The stock market rebounded Wednesday, despite a drop in technology stocks. This was partly due to concerns over stretched valuations. Meanwhile, the dollar reached a new high. The technology stocks that were hard hit on Tuesday started to rise ahead of Micron's earnings, whose chips are a key component in the AI boom. Investors priced in at minimum one rate increase from the Federal Reserve for this year, but sentiment was still fragile. All three Wall Street indexes rose, with gains driven by consumer discretionary, materials and industrial stocks. The biggest losers were energy stocks as the flow of crude through the Strait of Hormuz continued to push prices down. The Dow Jones Industrial Average increased by 1.12%. The S&P 500 rose by 0.84%. And the Nasdaq Composite grew by 0.89%. Wasif Latif is the chief investment officer at Sarmaya Partners. Investors are trying to position themselves for Micron's earnings announcement. The MSCI index of global stocks rose by 0.45%. MSCI's index for Asian stocks outside Japan increased by 0.15%. South Korea's KOSPI rose 3.5%, after falling?10% the previous session. The broader European stock market remained roughly unchanged for the day. The shares of Rheinmetall fell 15% after reports that the German government was planning to cancel a multi-billion euro frigate project. This decline was partially offset by gains made in heavyweight luxury and technology stocks. STRAIT of HORMUZ On signs that more oil tankers stuck in the Gulf will be moving out of the Strait of Hormuz, crude oil prices continued to fall, trading at four-month lows. The outlook is uncertain, as the U.S., and Iran, have given conflicting reports about what they agreed to in their peace agreement, including important elements like nuclear inspections, and control of the Strait. Brent dropped to $73.53 a barrel, a 4.55% drop on the day. DOLLAR JUMPS The U.S. dollar rose for the 'third day in a row against a basket major currencies, reaching its highest level in over a year. Markets expect Fed rate increases. Investors lowered expectations that the European Central Bank would raise rates more than they did this year. They also priced in a higher chance of the Fed raising borrowing costs. The euro traded at its lowest level in over a year. It was down for the third day, trading at $1.1354. The yen also traded around 161,77 on this day. This kept?markets on alert over a possible currency intervention to prop up the battered Japanese?currency. The dollar index rose by 0.21%, to 101.60. This is its highest level since 2025. The stronger dollar has pushed gold prices to their lowest level in more than seven months. Spot gold dropped 2.35%, to $4.011.69 per ounce.
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Rubio pledges security to Gulf leaders amid Iran deal concerns
U.S. Secretary Marco Rubio met with the leaders of the United Arab Emirates (UAE) and Kuwait (Kuwait) on Wednesday. He pledged not to undermine the security of these Gulf allies, as he tried to reassure Gulf Allies sceptical about a 'proposed deal' to end the U.S. - Israeli war against Iran. The U.S. and Iran?accord signed last week is the first between American and Iranian Presidents since the?1979 Islamic Revolution. It includes a $300 billion fund proposal and the lifting of certain sanctions against Tehran. Rubio, who arrived in Abu Dhabi, the capital of the UAE late Tuesday night for a three day tour through the oil-rich Gulf region is on his first high level diplomatic mission to discuss the agreement that will end the four month old war with Iran. He told reporters in Kuwait when he made his second stop of the tour, "We won't do anything to undermine the security our long-standing allies." During the war, Tehran battled two of the most powerful militaries in the world and effectively took control of the Strait of Hormuz. Commercial shipping of oil was "heavily" disrupted and shook the energy markets and world economy. Rubio hosted a working dinner in Abu Dhabi, the capital of the UAE. He was joined by other high-ranking officials including Sheikh Tahnoun bin Zayed Al Nahyan, National Security Advisor Sheikh Tahnoun bin Zayed Al Nahyan, and Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan. Rubio went on to Kuwait, and then to Bahrain. All three countries host American strategic military bases, and they were all hit by Iranian missiles during the conflict. This resulted in civilian deaths. Kuwaiti state news agency KUNA reported that Rubio had held discussions with Kuwaiti Emir Sheikh Meshal Al-Ahmad Al-Sabah about efforts to bolster stability and security. The State Department reported that he also attended the raising of the flag at the U.S. embassy, which had resumed its operations following Iran-linked drone strikes. The American flag, a symbol for liberty, unity and freedom is now proudly flying over Kuwait City. Kuwait is a vital partner in regional security and stability," Rubio said on social media after the ceremony. RUBIO TO? ADDRESS REGIONAL CONCERNS In a meeting held with the UAE President, the State Department reported that Rubio had discussed with him the Memorandum of Understanding with Iran, the safe transit of the Strait of Hormuz and the importance of peace for the region. Rubio reaffirmed U.S. support for the security of the Emirates - a major oil producing country. U.S. allies in the region are particularly concerned that Iran may use $300 billion of the proposed amount to rebuild its military. The agreement does not address Tehran’s ballistic missile capability, a concern to Gulf States, who were hit by Iranian drones and missiles during the war. Rubio, the top American diplomat, has been absent from Iran-related talks in recent weeks. Vice President JDVance led a roundtable discussion with Iranian counterparts at the weekend?in Switzerland. As a result, the UAE, which is a global financial hub that prides itself on its stability in an unstable Middle East, will face significant economic strains. SEPARATE NEGATIONS OVER THE STRAIT OF HORMUZ A diplomat who was briefed about the talks stated that Qatari Prime Minister Sheikh Mohammed bin Abdulrahman al-Thani met with Oman in Muscat to discuss the possibility of initiating talks involving Iran, Iraq and Gulf Arab States on the Strait of Hormuz. These discussions are not part of the U.S. - Iran peace talks. The shipping has started flowing through the Strait of Hormuz. This has led to a fall in the oil price. However, the long-term management and operation of the waterway is still being discussed between Iran, Oman, and other Gulf States. A diplomat said that there were plans to hold regional reconciliation talks in Saudi Arabia, between Iran, Gulf Arab States and possible other regional countries. Rubio's comments during his trip to the region will be closely examined to see how he frames the deal, which many Republicans in Congress believe amounts to capitulation. Rubio has a delicate mission: he must defend an accord preliminary that Trump supports, but he must also address in a credible manner the concerns of Gulf counterparts. Last week, Iran and the United States signed a memorandum outlining 14 points that outlined 'broad agreements to end the conflict. The interim agreement paved the path for 60 days of talks to resolve thornier issues, such as those related to Iran's nuke programme. The central question in the talks is what happens to Iran's highly-enriched uranium. This includes material that has been enriched up to 60% purity. That is a small step away from the 90% required for weapons-grade uranium. Tehran claims its nuclear program is for peaceful purposes. (Francois Murphy, Doina Ciacu, and Katharine Jack in Washington, and Gram Slattery, Michael Georgy, and Don Durfee in Vienna; editing by Don Durfee and Howard Goller; Sharon Singleton, Ali Williams, and Ali Williams; writing by Gram Slattery, Michael Georgy, and Howard Goller; additional reporting by Francois Murph in Vienna)
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Aluminium prices rise to levels seen before the Iran war due to a stronger dollar and Gulf supply expectations
The price of aluminium fell to pre-Iran war levels on Wednesday as the U.S. Dollar strengthened and the Middle East Risk Premium continued to decline. This outweighed any signs of disagreement between Washington and Tehran regarding key terms of a peace agreement. Benchmark three-month aluminum on the London Metal Exchange fell 3.3% to $3,124 per metric ton at 1601 GMT. It had earlier fallen as low as $3,110 and was below the support of the 200 day moving average, which is around $3142. The price of'metal for construction, packaging, and transport has fallen 18% after the Iran War caused Gulf production to be curtailed. This tightened markets outside China, and prices reached a four-year high on June 2. Macquarie analysts said in a recent research note that "sentiment has cooled" as the possibility of the Strait of Hormuz reopening?has increased and high margins are accelerating supply growth elsewhere. After a peak in this quarter, they expect aluminium prices to gradually decline through the end of 2028 due to new capacities in Indonesia, European restarts, and a possible recovery in Middle Eastern production. The U.S. Dollar reached a 13-month peak as investors prepared for Federal Reserve rate increases. The dollar price of metals increases when the U.S. dollar is stronger. LME copper dropped?2.2%, to $13,069.50 per ton. It had previously fallen to its lowest level since May 5, and was below the support of the 100 day moving average. Macquarie believes that a price correction in copper is likely to occur over the medium-term, given the 870,000 tonne visible stock built since 2025. They also forecast a surplus for the coming years. LME zinc dropped 2.1% to $3.419;?lead fell 1.2% to $1.911.50 and?tin declined 2.7% to $49.695. Nickel fell by 2.0% to reach $16,820 after hitting a three-month low at $16,660. Polina Devitt is the reporter. (Additional reporting by Solomon Cefai, editing by Mark Potter and Jonathan Ananda; Joe Bavier was the editor.)
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UK 10-year gilt rates fall to a three-month low due to oil price drop
British 10-year bond rates fell to a 3-month low on Wednesday, as part of an international government bond rally. Oil prices had fallen to their lowest levels since before the start of the Iran war. According to LSEG, the 10-year gilt 'yield', which moves inversely with price, reached its lowest level since March 18 when it hit 4.676%. This was at 1408 GMT. It surpassed a previous record low of 4.679%, set on April 8 The yield on 10-year U.S. Treasuries was 4.69% late on Wednesday. This is in line with what happened in the market. The yields on longer-dated bonds have reached their lowest levels since April. Brent crude oil fell by 4%, the lowest price since the beginning of the conflict in February. As more oil tankers started to leave the Strait of Hormuz, the losses increased. The PS2.9 trillion ($3.8 billion) market for government bonds in Britain has not shown any signs of concern about reports that Andy Burnham could replace Finance Minister Rachel Reeves, who is almost certain to be the next Prime Minister. Investors await details of Burnham's plans for borrowing, taxation and spending. "Our concern remains that there are no additional funds to increase public expenditure. Mohit Kumar is the chief European economist of Jefferies. He said that tax increases are unlikely to be effective and that efficiency savings will never work. Kumar said Jefferies expects the yield curve for gilts to steepen and that they will "stay away" (from long-dated gilts). Investors now expect a Bank of England rate increase of between 1 and 2 bps by year's end, down from one to two last week, as lower oil costs are expected to curb inflation pressure. The 'Debt Management Office' reported that the auction of benchmark 5-year gilts, worth PS4,25 billion, was conducted without incident Wednesday. Investors bid 3.47 times the amount offered. The 5-year yield in the cash market fell to a 2-month low of 4,242%, and was down last 6 bps for the day.
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Debswana, the central bank of Botswana, plans to increase diamond production by 20% in 2026.
A central bank official said on Wednesday that Debswana Diamond Company in Botswana expects to increase diamond production this year by 'about 20%. This could be a boost for an economy trying to recover from the 'long downturn of the global diamond market. Debswana, a joint venture between Botswana's government and De Beers which produces 90% of the diamonds produced in the country, plans to increase production to 18 million carats by 2026. Production was reduced sharply to 15 million carats the previous year due to a weak market. Thato Mokoti said at a press conference that the increase in production would drive the economy this year. A spokesperson for the company confirmed that an increase in production is planned. The diamond industry accounts for approximately a third (or three quarters) of Botswana’s fiscal revenues and about three-quarters (34) of its foreign currency earnings. This leaves the economy highly vulnerable to fluctuations in global demand. The downturn, which began in 2023 and was triggered by the economic uncertainty as well as increased competition from lab-grown stone, forced producers to reduce production. Debswana cut output by 16 percent last year while Botswana’s economy has contracted for the past two years. In February, Finance minister Ndaba Gaolathe stated that the economy would rebound to a growth rate of 3.1% by 2026. This was largely due to a recovery in both diamond production and demand. Minerals and energy Minister Bogolo Joy Kenewendo said on 'Tuesday' that Botswana is seeing a soft rebound in demand for diamonds in key markets like the U.S. Debswana produced around 24 million carats per year before the recession. Andrew Motsumi, the Managing Director of Debswana, told 'the media' on Tuesday that Debswana is restructuring in order to become more leaner and efficient. The company plans to reduce annual operating costs by one third by 2028 to 6 billion Pula ($416 millions).
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Gold falls to a seven-month low after dollar firms and rate hike bets increase
Due to the pressure of a stronger dollar and rising expectations for interest rate increases, gold prices dropped to a "more than seven-month-low" on Wednesday. Spot gold dropped 2.5%, to $4.006.29 per ounce at 11:40 am EDT (1540 GMT), following its lowest price since November 2025. U.S. Gold Futures fell 3% to $4 023.30. Dollar-priced gold became more expensive to holders of other currencies as the U.S. currency firmed. The U.S. dollar has firmed, making bullion priced in dollars more expensive for holders of other currencies. The market is pricing in a rate increase as early as September, due to a hawkish Fed. A surging dollar, at a high of?13 months, combined with lower expectations for inflation are putting pressure on precious metals," Tai Wong, an independent trader, said. He added that "for gold, there's support at just under $3.900, and central bank purchases are continuing, so it is unlikely to collapse, but expect an extended period of consolidation, as gold trading is no longer in favor." Investors are less interested in gold when interest rates increase because it does not offer a yield. Gold spot, which reached a record high of $5,594.82 in late January, is now down more than $1500 per ounce. ING analysts have cut their gold predictions. They now expect prices to average $4.300 per ounce during the third quarter of 2026, and $4.600 in the final quarter, compared to their previous projections. Investors are also waiting for?U.S. The Fed's preferred measure of inflation, Personal Consumption Spending, is due Thursday. Lukman Otunuga is a senior research analyst with FXTM. He said that more hawkish signals or economic data supporting the argument for higher rates could translate into further downside risks for gold. Spot silver, among other metals fell 5% to $58,96 after reaching its lowest level since December 2025. Standard Chartered stated in a 'note' that exchange-traded product outflows leave?silver susceptible to volatility in the near term, but a market undersupplied suggests a price improvement in the coming month. Palladium fell 5.2%, to $1173.23, and platinum lost 4%, to $1586.55.
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Chemours settles chemical release lawsuit with US Justice Department for $450 million
The U.S. Department of Justice announced on Wednesday that The Chemours Company had agreed to a $450-million?settlement for the'release of forever chemicals' in West Virginia, North Carolina and New Jersey. According to a DOJ statement, the multi-state settlement includes a $22.5-million civil penalty as well as $90-million in funding for controlling per- and polyfluoroalkyl chemicals, also known by their acronym PFAS. The statement said that this is the "first comprehensive settlement" by the federal government in order to "resolve enforcement complaints over pollution by a forever chemical manufacturer." According to the U.S. Government's complaint, three Chemours plants in West Virginia and New Jersey allegedly discharged PFASs into three different rivers. Chemours stated that the settlement resolved?federal complaints related to PFAS releases and other alleged noncompliance measures, primarily in its Washington Works Fayetteville Works Chambers Works facilities. The settlement acknowledges that Chemours began planning and implementing remedial measures and operational improvements at its facilities. It also?contains additional actions the company will be taking to mitigate future emission and enhance existing programs?, the company stated?in a press release. Chemours shares rose by 5.4% during the morning trading. Researchers have linked PFAS (also known as forever chemicals, because they degrade slowly in the environment) to a range of health issues. As part of the settlement, Chemours also announced that it had settled with the West Virginia Rivers Coalition in a lawsuit filed by the coalition alleging violations of certain discharge limits at Chemours Washington Works facility for less than $1 million. Reporting by Katharine J. Jackson in Washington, Daphne Psaledakis and Arunima K. Kumar in Bengaluru. Editing by Doina C. Nickel and Rod Nickel.
FOCUS: Rio Tinto's bid to buy Glencore puts pressure on BHP
Rio Tinto's plans to acquire Glencore to?create a global industry leader? could encourage consolidation in the copper-hungry sector, and put pressure on BHP to act.
The bid, depending on the final value, could be one of the largest?10?M&A transactions ever. It reflects a desire for scale, which bankers say could lead to mega-deals by 2026.
Mark Kelly, CEO of advisory firm MKI Global said, "This is another example that mining is consolidating, and big firms are forced to take corporate action in order to create value."
Anglo American, a London-listed company, announced in September last year what was at the time, the second largest M&A deal for that sector. The plan was to merge with Canada-based Teck Resources, and create a global heavyweight focused on copper. The deal is awaiting regulatory approval.
Some analysts say BHP is under pressure to act
BHP's $161 billion market capitalisation is the biggest threat to Rio's talks with Glencore. This could create a company valued at almost $207 billion.
If BHP does not participate in the current negotiations, it might consider another deal for its leadership.
Unnamed banking sources said this was the most likely outcome. They stated that Glencore's portfolio, which they viewed as too diverse, would benefit from asset sale. The regulatory authorities would most likely require some dispositions to alleviate competition concerns.
BHP has declined to comment.
Richard Hatch is an analyst at Berenberg. He said that BHP was the most likely to interfere in this deal. BHP may be tempted to bid against Glencore in order to keep the copper and divest the rest of the deal.
The talks between Rio and Glencore have reached a preliminary phase. Rio has until the 5th of February to submit a formal proposal, but this deadline could be extended.
Both sides have failed to reach an agreement in previous talks.
George Cheveley is the Natural Resources Portfolio Manager at Ninety One. Ninety one, which owns Glencore, stated that BHP might feel compelled to intervene but may also find it emotionally difficult, given its repeated failures to purchase Anglo American.
BHP attempted to buy Anglo American for months in 2024 to try and strengthen its declining dominance in the copper industry. It briefly revived the effort last November.
Sources say that BHP is also preparing to name a new CEO. It will most likely be an internal candidate, who must deliver on the promise of change.
BHP has declined to comment about its CEO succession.
SIZE DOES MATTTER? AND SO DOES COPER
Copper is the main reason for mining tie-ups, aside from the desire to scale up and increase margins while containing costs.
Copper is the metal of choice for conducting electricity because it's the least expensive and most widely used.
Mergers can be a good way to gain access to assets that are producing, and avoid the long, expensive, and uncertain process of searching for new reserves.
Kelly said, "The copper deal was the real takeaway from this and Anglo-Teck. We know that copper is appealing and buyers want to access it." There are alternative targets that could be considered if it fails to bid for Glencore.
Kelly said that "Vale and Freeport will both be on the agenda - but it is unlikely that they are for sale."
Analysts say that BHP could decide to do nothing.
Analyst Kaan Peker at RBC said that BHP had a better growth profile for copper than Rio/Glencore merged. "I don't believe they need to change anything," he added.
"That being said, if you are successful in the transaction, you may face some pressure from shareholders who will ask: 'How is it that Rio was able to pull this off, but you weren't able to with Anglo ?'." Reporting by Anousha Saoui in London, Clara Denina and Melanie Burton in Sydney. Charlie Conchie contributed additional reporting. Editing by Veronica Brown (and Barbara Lewis).
(source: Reuters)