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Investors weigh US interest rate outlook and AI bubble as they raise copper prices
The copper price rose on Friday as investors looked at the possibility of U.S. rate cuts in 2019 following lower consumer inflation in the United States. However, a possible artificial?intelligence bubble tempered?gains. The most-active contract for copper on the Shanghai Futures Exchange ended daytime trading 0.46% higher at 93180 yuan (US$13,234.86) per metric ton but finished the week 1.07% down. It reached a record of 94.030 yuan last week. As of 0714 GMT the benchmark three-month Copper on the 'London Metal Exchange rose 0.29%, to $11,812 per ton. The week is expected to end 2.53% higher. According to data released Thursday, the U.S. consumer price index rose less than expected in the year ending November. This gave some hope for rate cuts next year. Federal Reserve announced a rate cut of 25 basis points last week but indicated that it may not be doing so in the near future. The 43-day shutdown of the government has left statistics in a state of ambiguity. This has affected the financial markets and the bank. The skepticism surrounding AI trades is exacerbated by the recent tech stock crash and Oracle's partner in data centres, Blue Owl Capital?, pulling out of an agreement worth $10 billion for its next facility. Copper is widely used in data centers. Among SHFE ?base metals, nickel rose 3.17%. The London nickel benchmark rose 1.36%. Nickel ore, which is used in stainless steel and batteries, has recovered from a slump that occurred earlier this week, after the mining association of Indonesia, the country's top producer, announced that government plans to reduce annual nickel production?to about 250 million tons. Aluminium rose by 0.89% in Shanghai. Zinc advanced by 0.17%. Lead gained 0.42%. Tin increased?2.40%. The LME also saw gains in zinc, lead, and tin. $1 = 7.0405 Chinese Yuan Renminbi (Reporting and editing by Sherry Jackson, Harikrishnan Nair and Sherry Jacob Phillips)
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Gold prices fall on lower US inflation figures and a firmer dollar
Gold prices fell on Friday as lower-than expected U.S. inflation data reduced the appeal of bullion as a "hedge" against price increases, and a stronger dollar added to that. As of 0615 GMT spot gold was down 0.1% at $4,328.24 per ounce, but it was expected to finish the week 0.6% higher. U.S. Gold Futures dropped 0.2% to $4356.80. Spot silver increased 0.8% to $65.93 per ounce. It appears poised to finish the week at a?6% higher level after reaching an all-time high of $66.88 an ounce on Wednesday. Silver is up 128% this year, surpassing gold, which has seen a rise of 65%. The dollar remained near its 'one-week-highs,' making precious metals priced in greenbacks more expensive to other currency holders. Tim Waterer, KCM Trade's Chief Market Analyst said: "The softer inflation prints were a double-edged blade (for gold and Silver) in that they help justify a more dovish Fed but also means that their appeal as inflation hedges is diminished." The dollar is also creating resistance. U.S. consumer price index rose 2.7% in November, a far lower rate than the 3.1% increase predicted by economists. After the data, the Fed funds rate futures showed a slight increase in the likelihood of reducing rates at the January meeting. Goldman Sachs believes that gold prices will rise 14% by December 2026 to $4,900/oz in its base scenario, according to a note released on Thursday. However, it also cited upside risks due to the potential diversification of private investors. Waterer said that "precious metals have become a rage, and platinum and palladium are now following gold and silver in the trend." Platinum climbed 1.1% to reach $1,937.20 on Friday after reaching a 17-year high. Palladium rose 0.6% to $1706 after reaching a near three-year high in the previous session. Palladium is on course for its best weekly gain since September 2024.
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Investors on edge as rate hike bets and financials boost Australia shares
Australian shares recorded modest gains on Friday. The majority of sectors were in the green and banking stocks, at the top at the end of a week that was otherwise depressing as investors considered the Reserve Bank’s rate hike trajectory for 2026. The S&P/ASX 200 index closed the day 0.5% higher, at 8,628.20. The benchmark index, however, ended three consecutive weeks of gains by losing 0.8% on Friday. Investors are betting on rate increases in the first half 2026, after a stubbornly high inflation and a hawkish stance at a central bank meeting last week. The markets are still betting on a Reserve Bank of Australia's cash rate of?3.6% next year. Odds of an increase in February? are priced at 25%. They rise to 45% by March, and 75% by May. After a nice rebound from their lows in November, shares are now under pressure. "Our view is that the renewed weakness over the past two weeks was a correction," said Shane Oliver. He is the head of investment strategy at AMP and the chief economist. The Reserve Bank of Australia minutes for its December meeting will be released next week. A key reading of monthly inflation is scheduled to be released early in January. All four "Big Four" banks ended in positive territory, as the financial sector advanced by 1.1%. The sub-index's performance in 2026 will be closely monitored after concerns over frothy values and soft earnings growth put it on track for a 7% annual gain, which is sharply below last year’s 28.2% surge. Stocks of rate-sensitive consumer discretionary and real estate added 0.8% each. The only exception was the mining industry, which lost 0.6%. BHP and Fortescue fell 1.2%?and 3.2% respectively. The sub-index fell 1.7% on a weekly basis, ending three weeks of gains. The S&P/NZX 50 closed at 13,333.40, up 0.6%. The benchmark index, however, fell 0.6% in its third week of losses. (Reporting and editing by Ronojojo Mazumdar in Bengaluru. Nikita Maria Jio is based in Bengaluru.
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MORNING BID EUROPE - Japan's savers can party like it is 1999
Wayne Cole gives us a look at what's ahead for the European and global markets. After 30 years of waiting, Japanese savers are finally able to get 0.75% on their money. Just don't spend all your savings at once. Bank of Japan raised rates by a quarter-point to 0.75%, as was expected. The market's knee-jerk response was to sell the yen and the dollar shot up as high as 156.19 before stabilizing at 156.00. The Nikkei gained 1.2% in the first hour, largely due to a Wall Street rally sparked by stellar Micron Technology results. The BOJ was not dovish. The BOJ noted that real rates remained at "significantly low" levels, even after the increase. It also pledged to continue tightening if the economy and inflation progressed as expected. The policymakers also seemed more confident in the ability of firms to continue raising?wages and maintain inflation at around 2%, a cycle they have spent decades trying create. The bond market took them at their word and 10-year yields climbed by 5 basis points, to 2.115%. This is the highest level since August 1999, when 'Genie in a Bottle' was ranked?No.1 in the charts. 1. Investors now await BOJ Governor Ueda's post-meeting press conference. His comments have previously moved the markets. His thoughts on terminal rates will be one of the main topics. He has long said that neutral is a range between 1.0% and 2.5%. But markets only price in one more increase to the bottom of this band. If Ueda were to hint at anything more, it could hurt bonds while helping the yen. If not, the U.S. CPI data released on Thursday could contain a lot of damned statistics and lies. No serious economist thinks that inflation really slowed down to 2.7% from 3.0% in October (October was lost due to the shutdown). The Bureau of Labor Statistics was only able to collect data from mid-November onwards, in time for Black Friday sales. The BLS' method for addressing the lack of data for October also created a downward bias on rents and owner's equivalent rentals, which is likely to last for some time. The impact of this may not be reversed before the April edition of the CPI, which is when the annual readings are released. What the Fed's policymakers need. The following are key developments that may influence the markets on Friday. ECB's Lane, Cipollone and Kocher are among the speakers - EU Flash Consumer Confidence; German GfK Sentiment; German and French Producer Prices; UK Retail Sales US University of Michigan Consumer Sentiment, Existing Home Sales
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The price of oil is expected to fall for the second consecutive week
The oil prices fell on Friday, and are expected to fall for the second consecutive week as rising prospects of a Russia/Ukraine deal counteract concerns about supply disruptions due to a Venezuelan blockade. Brent?crude?futures fell 9 cents or 0.2% to $59.73 a bar by 0456 GMT. U.S. West Texas intermediate crude traded 13 cents or 0.2% lower at $56.02 a bar. Brent fell 2.3% on a weekly basis while WTI?was down by 2.5%. Donald Trump, the U.S. president, said on Thursday that he believed talks to end?the conflict in Ukraine were "getting closer to something". This is ahead of an upcoming U.S.-Russian?officials meeting this weekend. It was not clear, in the case of the second potential geopolitical trigger, how the U.S. could enforce Trump's declaration to blockade oil tankers that enter and leave Venezuela (which?makes?around 1%?of global supply) under sanctions. The U.S. Coast Guard seized an oil tanker from Venezuela in a historic move last week. "Uncertainty about enforcement details and the optimism that a possible U.S. led Ukraine peace deal may still emerge (are) easing supply concerns in global markets and tempering risk premiums," IG Analyst Tony?Sycamore stated on Friday. Analysts say that further measures against Russian oil may pose a greater risk to supply than Trump's Venezuelan?blockade on tankers. According to sources familiar with Venezuelan oil export operations, Venezuela authorized on Thursday two very large crude carriers that were not sanctioned by the country?to sail towards China. Bank of America analysts predict that the lower oil price will reduce the supply of oil, which may prevent a rapid fall in the prices. Sycamore, IG's analyst, said that a rally above the resistance level of $56.70-$56.90ish could strengthen the argument that the selloff this week to the $54.98 bottom was a false breakdown lower. "Conversely a break under $54.98/90ish will reignite the downside momentum and target the psychological $50.00 threshold." (Reporting and Editing by Shri Navaratnam).
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Gold prices fall on lower US inflation figures and a firmer dollar
Prices of gold fell on Friday due to lower than expected U.S. inflation figures, which reduced the appeal of bullion as a hedge against rising inflation. As of 0147 GMT spot gold was down by 0.3%, at $4,318.19 per ounce. However, it is expected to finish the week with a 0.4% increase. U.S. Gold Futures dropped 0.4% to $4346.60. Spot silver dropped 0.5% to $65.10 per ounce but was expected to finish the week at a?5% increase after reaching an all-time record of $66.88 an ounce on Wednesday. Silver is up 125% in the past year, surpassing gold, which has seen a rise of 65%. The dollar remained near its one-week-highs, making precious metals priced in greenbacks more expensive to other currency holders. "The softer inflation prints were a double-edged blade (for gold and silver), as it helped justify a more dovish Fed but also meant that they lost some of their appeal in terms of inflation hedges. Tim Waterer, KCM Trade's Chief Market Analyst, says that the dollar is standing firm and creating resistance. Data shows that U.S. consumer price indexes rose by 2.7% in November compared to the same month last year, below the 3.1% rise predicted by economists. Federal funds rate futures?indicate a slightly higher chance that the Federal Reserve will reduce interest rates during its meeting in January, following the data. Goldman Sachs believes that gold prices will?rise 14% to $4900/oz in December 2026, in its base scenario, according to a note it released on Thursday. It also noted upside risks due to the potential diversification of private investors. Platinum rose 0.5% to $1.924.59, after reaching a 17-year high?on Thursday. Palladium dropped 1.1% to $1677.68, after reaching a three-year high Thursday. Both were on track to make weekly gains, while palladium is set to have its best week since Sept. 2024. Waterer said that "precious metals have become popular, and platinum and palladium are now following gold and silver in the fashion world."
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Japan increases rates and Asia stocks rise with Wall Street
The?yen eased on Friday after the Bank of Japan increased interest rates to three-decade-high levels and left the door open for?further easing. The decision to raise rates to 0.75 percent was widely expected and the initial reaction was to sell the yen in anticipation of a more detailed outlook at the media conference by BOJ Governor Kazuo ueda later in the day. The markets had bet on just one rate hike in 2019, to 1.0%. Ueda, however, has said that a neutral rate range would include rates from 1.0% up to 2.5%. Investors should be wary if he suggests that the rates may be raised more than once by 2026. Abhijit Sundera, senior APAC economist for Capital Economics, stated that the BOJ indicated that more tightening would be likely, given that real interest rates are still negative, despite today's increase. He added that he believed the data would more than likely surprise him to the upside, predicting rates of 1.7% by 2027. The core CPI in Japan rose by 3.0% annually in November, the same as it was last month. The dollar has gained 0.3% in the last few days to 156.03yen, and the euro is up 0.3% at 182.96. The yields on Japan's 10 year bonds are now at 1,975%, which is just below a 18-year high. Japan's Nikkei gained 1.3% after following Wall Street's overnight rally. South Korea gained 0.8%, and Taiwan, a tech-heavy country, 1.3%. This was due to the stellar results of chipmaker Micron Technology. The MSCI broadest index of Asia-Pacific shares outside Japan gained 0.7% while Chinese blue-chips gained 0.6%. ByteDance announced that it had reached a deal with major investors in order to create a joint venture for the operation of TikTok’s U.S. App. This was done to avoid an American government ban. ECB AND BoE OFFER DIFFERENT LEVELS of HAWKISHNESS EUROSTOXX Futures and FTSE Futures both fell 0.3% for European bourses. DAX Futures also dropped 0.2%. S&P futures were flat while Nasdaq Futures gained 0.2%. The unexpected slowdown in U.S. inflation rates to 2.7% has boosted sentiment, but analysts warn that the data are clearly distorted by the government shutdown. They cannot be taken at face-value. The Federal Reserve's pricing has only moved marginally. A rate cut was implied in January at 27%. In March, the price increased to 58%. Before the data, it had been 54%. Bond markets welcomed the U.S. CPI figures with caution, as the 10-year Treasury yields remained at 4,126%. This is a far cry from the recent high of 4,209% for the past 3-1/2 months. Overnight, British Bonds?had suffered a blow after the Bank of England lowered rates as anticipated but only following a 5-4 vote. The policymakers have also expressed caution over the pace of future easing. Another cut is not fully priced until June. The European Central Bank, which held rates at 2,0 %, was even more hawkish. It?suggested a probable end to the ease cycle. The markets indicate that there is only a small chance of a reduction for the entire year 2026. The central banks of Sweden and Norway also remained unchanged, although the Norwegians left the door open for one or more reductions. Gold fell 0.3% on the commodity markets to $4,319 per ounce, still below its October peak at $4,381. Silver has seen a drop in price after its meteoric rise, but palladium, platinum and other metals remain in high demand. The possibility of additional U.S. Sanctions against Russia, and the risks of a blockade on Venezuelan oil tankers, helped to support the price of crude. Brent crude fell 0.2%, to $59.71 per barrel. U.S. crude dropped 0.3%, to $56.00 a barrel. (Reporting and editing by Sam Holmes, Jacqueline Wong, and Wayne Cole)
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Lundin Mining sells Eagle nickel-copper to Talon Metals at a price of $84 million
Lundin Mining, a Canadian mining company, announced on Thursday its intention to sell the Eagle Nickel-Copper Mine and Humboldt Mill in exchange for Talon Metals shares. This will create a nickel-copper-only American company. According to the?deal?, Lundin's U.S. subsidiary that owns Eagle Mine in Michigan will be transferred to Talon for 275 million Talon Shares, worth approximately $83.7 million at current prices. Lundin will own about 20% of Talon, on a non-diluted base. Eagle is the only nickel mine in operation today in the United States. Since production began, the mine produced 194,000 tons nickel and 185,000 tonnes copper, generating $3.2 billion revenue by 'the third quarter 2025. Talon is now positioned for processing critical minerals in multiple U.S. locations, including the Humboldt Mill, in Michigan, and a planned future facility in Beulah in North Dakota. After the deal, Talon will have a board of 10 directors with two Lundin nominees. Darby Stacey will be appointed Talon's CEO and Director. He is currently the managing director for Eagle Mine?and Humboldt Mill. Lundin stated that the transaction allowed it to streamline its portfolio, and focus on its large copper?operations? in Brazil and Chile. It also retained exposure?to potential upside?through Talon's exploration assets?including the Tamarack Nickel project?in Minnesota. The deal is expected to close early in January 2026. After the completion of the transaction, Eagle's output will no longer be considered in Lundin Mining’s production guidance.
Zinc dealing with supply deficit as mine output falls again: Andy Home
The worldwide zinc market is dealing with a large supply deficit in 2024 as a basic materials capture forces smelters to reduce production of refined metal.
The International Lead and Zinc Study Hall (ILZSG) has significantly modified its evaluation of zinc market characteristics considering that it last satisfied in April.
A previously anticipated supply surplus of 56,000 metric heaps has actually been updated to a 164,000-ton supply deficit.
Mine production is now expected to succumb to a third consecutive year and smelter treatment terms, a good indication of basic material schedule, have turned negative.
China, which hosts the world's largest smelter network, is feeling the margin pinch and nationwide production of refined zinc is moving at an accelerating rate.
SUPPLY CRUNCH
Back in April ILZSG expected mine production to increase by 0.7%. year-on-year in 2024. Just five months later, that projection has. been slashed with mined zinc output now on track to fall by 1.4%. to 12.06 million loads, it said.
This will be the third straight year of sliding output with. prepared for 2024 production 5.7% lower than 2021, the last year. of the zinc mining boom.
Low zinc rates in 2023 took a heavy toll of higher-cost. operators, particularly in Europe, where the suspension of the. Tara mine in Ireland and Aljustrel in Portugal will trigger. regional production to downturn by 11.4% this year.
The resulting capture on smelter margins has actually become more. intense as the year has actually progressed. Area treatment charges for. Chinese imports of zinc focuses fell into negative. territory for the very first time ever in August and have actually continued. sliding.
Local data supplier Shanghai Metal Market assesses the spot. market at an unfavorable $40 per lot, highlighting the mismatch. between smelter need and basic material accessibility.
China's improved metal output was dropping even before some. of the country's top manufacturers met in August to agree on suppressing. run-rates.
The pace of decrease has sped up in the last couple of. months. SMM approximates zinc metal output was down by 7.6%. year-on-year in August and anticipates the gap to have actually widened to. 10.4% in September.
ILZSG forecasts full-year Chinese output to be 3.4% lower. than 2023, adding to a 1.8% drop in worldwide production. It's a significant modification from April, when the group expected. refined output to rise by 0.6%.
The group's need forecasts have been modified but not. substantially changed. Usage is anticipated to grow by 1.8% this. year with the rest of the world using up the slack from China. as the core growth motorist.
Chinese need will increase by just 0.7% in 2024, reflecting. zinc's direct exposure to the country's struggling property sector. Galvanised steel, extensively used in construction, is zinc's most. crucial end-use sector, representing 60% of all need, and. China has been the world's most active contractor over the last. decade.
RECOVERY NEXT YEAR?
ILZSG anticipates this year's supply deficit to be followed by a. healthy 148,000-ton surplus in 2025 due to higher zinc rates.
London Metal Exchange zinc has actually recovered a lot of ground. considering that 2023, when it touched a three-year low of $2,215 per heap. in May. Three-month metal struck a year-to-date high of. $ 3,209 recently.
The enhanced price environment ought to motivate restarts. Swedish manufacturer Boliden has actually already revealed the. reactivation of Tara in Ireland.
ILZSG expects global mined production to leap by 6.6% next. year from this year's distressed levels due to a combination of. restarts and the postponed ramp-up of the Ozernoye mine in Russia.
Much better focuses accessibility is expected to feed a 3.9%. year-on-year recovery in worldwide refined zinc production and a. go back to supply surplus.
Nevertheless, that presumes both a fast reactivation of. mothballed operations and no significant unforeseen disruptions.
Within days of ILZSG finalising its figures, Ivanhoe Mines. revealed a major downgrade of expected production from. its brand-new Kipushi mine in the Democratic Republic of Congo.
This year's assistance has actually been cut from 100,000-140,000 lots. to 50,000-70,000 tons of included zinc due to a mix of. operational teething problems and a lack of power.
As ILZSG's revisions because April plainly show, zinc's. supply dynamics are in a state of high flux right now and are. likely to remain that method for a long time yet.
The opinions expressed here are those of the author, a. columnist .
(source: Reuters)