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Investors continue to buy gold as they focus on US payrolls
The gold price remained stable on Thursday, as investors awaited the non-farm payrolls report due Friday in order to determine how the Federal Reserve will set its interest rates. Meanwhile, global trade tensions continued. As of 0843 GMT, spot gold remained unchanged at $3,373.69 per ounce. U.S. Gold Futures fell 0.1% to $3397.20. I would say the path of least resistence is still upwards, despite the flat trading of gold today. This is due more to traders waiting and watching for non-farm payrolls, said Ricardo Evangelista senior analyst at brokerage ActivTrades. The ADP National Employment Report released on Wednesday revealed that private payrolls in the United States increased much less than anticipated in May. According to an economist survey, the more comprehensive nonfarm payrolls report due on Friday will show that nonfarm payrolls grew by 130,000 jobs last month after increasing by 177,000 in March. On Wednesday, Donald Trump called on Jerome Powell, the Fed chairperson, to lower interest rates. "I believe that a weakening of the US labor markets will increase bets for a dovish Fed and, therefore, on the Fed lowering interest rates (which) would have a positive effect on gold," Evangelista continued. In a low interest rate environment, gold, which is a safe haven during periods of economic and political uncertainty, tends thrive. In a post on social media, Trump referred to China's Xi Jinping in a negative light. He said that he was "tough" to deal with and "extremely difficult to do business with". This dampened hopes of a quick resolution to the trade tensions. In the meantime, Trump's doubling of tariffs for steel and aluminum imports went into effect on Wednesday. Carsten Menke is an analyst at Julius Baer. He said: "We are sticking to our price target of USD 3,350 in three months and USD 3,500 within a year, reflecting both continued central bank purchases and sound demand from safety-haven investors." Silver spot fell by 0.6%, to $34.74 per ounce. However, it reached its highest level since November 2012. Platinum rose by 3.6% to reach $1,123.15 - its highest level since the beginning of April 2023. Palladium increased by 1.7%, reaching $1,017.37. (Reporting and editing by Anushree mukherjee, Bengaluru)
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Europe awaits ECB cuts after U.S. driven bond rally
The European markets started the day steady, ahead of a possible ECB rate cut. Weak U.S. data had sparked a rally in government bonds and pushed Wall Street into bull market territory. Investors are eager to know what Christine Lagarde, and other policymakers, think will happen next. This is because of the uncertainty surrounding a possible U.S.-Canada trade agreement. German data released earlier this week showed that industrial orders in April rose unexpectedly due to a strong domestic demand. This helped lift Europe's STOXX 600 Index for the third consecutive day as Germany's approval a tax relief package lifted sentiment. As traders waited for the ECB to act, both regional and euro government bonds remained unchanged. The euro zone's inflation is now in line with its central bank's target of 2%. Policymakers have already telegraphed that they will make their eighth rate cut later. Oliver Rakau of Oxford Economics said that "a cut today is pretty close to a done deal." He expected Lagarde's post-rate-decision press-conference to be even less committed than usual. Rakau expects to make two more cuts before the end the year, but the combination of trade talks between the U.S. He said that a sudden trade agreement could change the course of events. "They do not want to be caught off guard and German fiscal stimuli are also coming." The currency markets were mostly in a holding pattern. Dollar dropped during the previous session due to weak U.S. services and jobs data. This puts the spotlight on the non-farm payrolls that are due Friday. The yield of the 30-year U.S. Treasury Bond fell by more than 7 basis point to 4.911%. Meanwhile, the benchmark 10-year bond yield has dropped to 4.385% after reaching a three-month high of 4,629% only a few weeks ago. TRADE TALKS Trump's doubled tariffs on imports of steel and aluminum, which hit Canada and Mexico particularly, became effective Wednesday. On the same day, Trump's administration asked trading partners for "best offers" to prevent other import levies from taking effect in July. Ryosei Acazawa, Japan's top trade negotiator, will be in the U.S. for a second round of negotiations on Thursday. Friedrich Merz, the German chancellor was in Washington as well to meet Trump. The MSCI broadest Asia-Pacific index outside Japan has risen 0.7% overnight. South Korea's KOSPI reached an 11-month-high amid optimism about the new President Lee Jae-myung, and Hong Kong’s Hang Seng is up 1%. Chris Nicol is the Australia equity strategist for Morgan Stanley. He said that the markets are complacent in the sense that they expect to continue with the resolution of issues and the closing of deals. The impact of growth and inflation on the policy remains relatively undetermined. The dollar index (which measures the greenback versus a basket currencies) rose by 0.1% to 98.0, reversing its 0.5% decline on Wednesday. The dollar rose 0.3% against yen, at 143.34. It was also 0.25% stronger against Swiss Franc, at 0.82025 Swiss francs. And it was virtually unchanged in relation to the Euro and Sterling at $1.14. Gold lost its gains of the previous day. Oil, however, remained steady after falling on an increase in U.S. stocks and Saudi Arabia lowering its July crude prices for Asian buyers. Spot gold fell 0.1% to $3,374 an ounce. Brent crude rose 0.4%, to just above $65 per barrel. (Editing by Alex Richardson; Additional reporting by Rocky Swift, Tokyo)
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London copper prices rise on weaker dollar
London copper prices rose slightly on Thursday, despite a weakening U.S. Dollar. The market's focus was on the ongoing trade talks between the U.S. As of 0702 GMT the three-month copper contract traded on the London Metal Exchange rose nearly 0.4%, to $9,656.5 a metric ton. The most actively traded copper contract on Shanghai Futures Exchange remained at 781,170 yuan per ton ($10,884.46). The dollar index (which measures the U.S. dollar against six other currencies) was at 98.87, and has fallen about 9% in this year. It is on track to have its worst yearly performance since 2017 Dollar-denominated investments are more affordable for holders of currencies other than the U.S. On Wednesday, U.S. president Donald Trump said that his Chinese counterpart Xi Jinping was "extremely difficult to make a trade with". This exposed frictions, after the White House had raised expectations for a long-anticipated phone call between these two leaders. Canada was preparing possible retaliations, while the European Union announced progress in trade negotiations on Wednesday as the new U.S. Metals Tariffs caused more disruption to the global economy, and increased urgency in negotiations with Washington. ANZ reported that "Trump's tariffs of 50% on aluminum and steel have raised expectation that he would soon follow through on his pledge to impose tougher duties on copper, as well", Tin prices on the LME fell around 0.2%, to $31,950 per ton. This was after they had hit a record high of $31,950 on Wednesday. The reason for this is that there are concerns about the slow resumption in supply from Myanmar's rich tin state Wa. Lead eased 0.4% at $1,983, and nickel edged up by 0.3% to $15440. Lead added 0.4% at 16,695 Yuan while nickel fell 0.4% at 121,570 Yuan. Click or to see the latest news in metals, and other related stories. DATA/EVENTS : (GMT) 0830 US S&P GLOBALPMI: MSC Composite - OUTPUT MAY 1215 EU ECB refinancing, deposit rate Jun 1230 US International trade $ Apr 1230 US Jobless Clm, 31 May w/e. 1430 US EIA - Nat Gas Chg Bcf, Nat Gas - EIA Implied Flow, 30 May w/e.
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Iron ore prices fall as the focus shifts from China's steel demand to a softening of iron ore.
Iron ore futures fell on Thursday as the focus returned to a softening of steel consumption during China's off peak demand season. The daytime trading price of the most traded September iron ore contract at China's Dalian Commodity Exchange was 701 yuan (US$97.60). As of 0701 GMT, the benchmark July iron ore traded on Singapore Exchange fell 0.8% to $94.7 per ton. Analysts at Galaxy Futures stated that prices of the main steelmaking ingredient will fluctuate due to the seasonal weakness in demand. The iron ore market is not changing fundamentally. "The upward momentum caused by the coal price rally faded and ore prices also weakened," said Zhuo Guqiu, a broker at Jinrui Futures. Zhuo said that the downside potential of hot metal production is limited by its relatively high output, despite reductions in production and falling portside inventories. Iron ore demand is usually gauged by the hot metal production. Galaxy's analysts noted that despite a recent trade truce, the steel exports are showing signs of a slump, which is dragging down demand. A weak steel demand is a risk to feedstocks. Following Wednesday's rally of more than 6%, other steelmaking ingredients coking coal, and coke, have also seen gains, albeit slower. They are up 1.68%, and 0.56% respectively. The benchmark steel prices on the Shanghai Futures Exchange are range bound. Rebar grew 0.14%; hot-rolled coil fell 0.19%; wire rod grew 0.06%; and stainless steel climbed 0.2%. $1 = 7.1822 Chinese Yuan (Reporting and editing by Amy Lv, Lewis Jackson and Eileen Soreng).
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Nickel supply will continue to expand despite slower demand growth, according to industry experts
Speakers at an industry conference this week predicted that oversupply on the global nickel market would persist in the coming years due to the expansion of production capacity and the slower growth in demand, particularly for the metal used as a component in stainless steel and batteries. The benchmark price has been halved over the last three years due to a surge in nickel production in Indonesia. This country is the largest producer of nickel in the world with a 63% market share. Macquarie analyst Jim Lennon said at a Shanghai Metals Market industry conference in Jakarta that the market was oversupplied. In addition, he added, "Indonesia will soon complete several projects, which will increase production capacity." Lennon believes the surplus will continue to grow until 2027-2028. The London Metal Exchange's most traded nickel contract was trading at $15,380 a metric ton on Thursday morning, after hitting a low of $13,865 five years ago on April 7. Nickel reached a record-high above $48,000 per ton early in 2022. Lennon stated that the $15,000 threshold is critical for costs in the industry. He said that after production cuts started in 2022-2023 half of the existing producers would be at risk if price falls below this level. The use of lithium iron phosphate (LIP) batteries, which are cheaper, has slowed the growth in nickel demand. The analyst's estimate of the battery industry's nickel consumption in 2030 has been reduced to 967,000 tonnes, down from 1.5 million tons as predicted by the industry two years ago. Nickel consumption by the battery industry was 518 tons in 2013. Denis Sharypin is the strategic marketing director of Nornickel in Russia. He said that prices are being pushed lower by an oversupply, which means about one-fourth nickel producers worldwide are losing money on a cost-plus basis. Steven Chen, the global sales director at Eternal Tsingshan Group Ltd (part of China's Tsingshan holding group), said that Indonesian nickel pig iron smelters, which is an alloy used to make stainless steel, also face margin compression. Chen stated that "Smelters have been struggling and this may lead to a reduction in production. There may also be widespread cuts or closures of some smaller smelting facilities in the near future." Indonesia's mining ministry has stated that the government will manage nickel supply and demand in order to support prices. Hongmei Li, Singapore (Writing & Additional Reporting) Mrigank Dhaniwala (Editing).
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Lynas, Australia's automaker, surges after warnings from Chinese export restrictions on rare earths
Shares of Australia’s Lynas Rare Earths rose to their highest level in over two years on Thursday, after automakers warned China’s export restrictions could cause production delays. Lynas, the largest rare-earth manufacturer outside of China, is expected to profit from global supply concerns. Analysts believe that the rising geopolitical tensions and the demand for essential minerals could be favorable for the Australia listed company. Lynas stock rose 11.8% to A$9.2, reaching its highest level since the 8th of February 2023. This was also the biggest intraday percentage increase for the stock since October 24, 2023. Hebe Chen is a market analyst with Vantage Markets. She said: "Lynas rally...is a powerful representation of the dual forces at work today: escalating global tensions and surging green technology demand." As China tightens its rare-earth export restrictions, the markets price in supply risk -- positioning Lynas as a strategic hedge. In April, China, which produces 90% of the world's rare-earth minerals, implemented export restrictions on strategic minerals as a response to tariffs imposed by U.S. president Donald Trump. This move has raised alarms in industries that rely on 17 rare earth elements. These are essential for advanced electronics, defense systems, and electric vehicles. German automakers have emphasized the urgency of their concerns this week by warning that China's restrictions on exports of rare-earth minerals pose a serious threat to production and local economies. The European auto supplier association CLEPA reported that several production lines had shut down due to a lack of supplies. Mercedes-Benz, on the other hand, said it was in talks with top suppliers to build "buffers", such as stockpiles, to protect against possible threats to supply. China is the world's largest supplier of rare-earth metals, despite the fact that these elements are common in the earth crust. This is because China has mastered the environmentally difficult and complex refining process. Lynas, a non-Chinese producer, is a key player in the U.S. rare-earth industry.
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Asian shares continue to rise, while the dollar languishes in front of the ECB
The U.S. Dollar remained stagnant as the European Central Bank released its outlook on a turbulent global economy. Dollar fell in the previous session due to weak U.S. data on jobs and services. Friday will bring more important employment data. The damage to the U.S. economic system is becoming more evident as a result of President Donald Trump's erratic trade policies, and bilateral agreements remain unrealised. The European Union and Canada reported progress in their trade negotiations with Washington. In this context, the market will be paying greater attention to any signals that Christine Lagarde gives about her future plans. Kyle Rodda is a senior analyst for Capital.com. He said that there's uncertainty regarding the guidance given by the central bank, due to the uncertain outlook of U.S. global trade policy and U.S. Trade Policy. If the central bank fails to provide sufficiently dovish advice, it could disrupt the equity markets and give the euro upward momentum. Trump's doubled tariffs on imports of steel and aluminum took effect on Wednesday. They were aimed at Canada and Mexico. On the same day, Trump's administration asked trading partners for "best offers" to prevent other import levies from taking effect in July. Ryosei Acazawa, Japan's top trade negotiator, will be in the U.S. for another round on Thursday. Friedrich Merz is due to travel to Washington as well. The broadest MSCI index of Asia-Pacific stocks outside Japan rose by 0.4%. Japan's Nikkei index fell 0.5%. South Korea's benchmark KOSPI stock index surged by 0.9%, reaching a new 11-month high due to the extended optimism following the election of Lee Jae Myung as president. Hong Kong's Hang Seng index rose 0.5% on the back of tech shares. Chris Nicol is the Australia equity strategist for Morgan Stanley. He said that the markets are complacent in the sense that they expect to continue with the resolution of issues and the closing of deals. "The policy has yet to be set in stone, and the impact on growth and inflation is still uncertain." The dollar index (which measures the greenback versus a basket currencies) rose by 0.1% to 98.879 and reversed its 0.5% decline on Wednesday. The dollar increased by 0.2%, to 143 yen. The euro was mostly flat at $1.1411, after a 0.4% increase in the previous session. Gold lost its gains of the previous day, while oil fell after an increase in U.S. stocks and Saudi Arabia slashed its July crude prices for Asian buyers. Spot gold fell 0.2% to $3,367.30 an ounce. U.S. crude fell 0.5% to $62.58 per barrel. The S&P 500 futures as well as the Euro Stoxx 50 pan-region futures were not much changed.
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Ukraine and the US discuss ways to make the minerals fund operational within a year
Ukraine's Yulia Shvyrydenko said that the United States and Ukraine have discussed ways to make the minerals fund operational before the end of this year. The fund's initial meeting is scheduled for July. Svyrydenko signed the agreement in Washington, after months of hard negotiations, which made the terms more favorable for Kyiv. The agreement was heavily promoted by U.S. president Donald Trump. The Ukrainian parliament ratified this agreement. Svyrydenko met with U.S. Treasury Sec. Scott Bessent on Wednesday and the Development Finance Corporation which will be the partner of the Minerals Fund. "We discussed very concrete steps to make this fund functional during this year," Svyrydenko told reporters. We will have our first board meeting in July to discuss the seed capital needed to operate this fund. We should also adopt a strategy for investing in this fund over the next few decades. Negotiations leading to the signing of the Mineral Fund deal were preceded by a heated discussion between Trump and Ukrainian president Volodymyr Zelenskiy at the White House about how to end Ukraine's war with Russia, which has lasted for three years. Zelenskiy's ability to repair his relationship with Trump was dependent on the agreement. In April, the two men briefly met at the Vatican during the funeral for Pope Francis in order to get their relationship back on track. Reporting by Gram Slattery, Costas Pitas and SonaliPaul; Editing by Ron Popeski & SonaliPaul
Copper prices fall as China's manufacturing activity falls short of expectations
The copper price fell on Tuesday, as the top metals consumer China failed to meet expectations. This indicates that U.S. trade tensions are affecting this manufacturing superpower.
The benchmark three-month copper price on the London Metal Exchange fell 0.5%, to $9.571 per metric tonne at 0952 GMT.
The most actively traded U.S. Comex Copper futures dropped 1.9% to $4.76 a pound. This reduced the premium over the LME benchmark from $1,074 to $914 a tonne, down from Monday's level of $1,074.
Comex futures reached $4.9495 on Monday, the highest level since April 3. This was due to concerns that U.S. president Donald Trump's plans to double tariffs for steel and aluminum imports from Wednesday to 50% would lead to new U.S. tariffs on copper, which are subject to an investigation that is ongoing in Washington.
Ole Hansen is the head of commodity strategy for Saxo Bank. He said: "Traders are questioning whether these levels can be sustained after another round of disappointing China data over night."
A private sector survey revealed that China's manufacturing activity has shrunk for the first eight-month period. The Caixin/S&P Global Manufacturing PMI dropped to 48.3 last month, the lowest level in 32 months.
China's official PMI for May showed a decline in factory activity for the second consecutive month.
Traders were waiting on a possible phone call between Trump, the Chinese leader Xi Jinping, and U.S. manufacturers, who also contracted in May for a third consecutive month. The White House said that they would likely speak this week.
The 21-day moving-average, which is currently $9,526 and the continued outflows of stocks from LME registered warehouses, are supporting the LME copper. LME daily data revealed that the inventory had fallen to 143.850 tons after 4.600 deliveries. This was the lowest level in over a year.
Other LME metals include aluminium, which fell by 0.8%, to $2446.50 per ton. Zinc also declined, down 0.3%, to $2690. Lead dropped 0.5%, to $1971.50. Nickel shed 0.8%, to $15,415. Tin rose 0.3%, to $30,745. (Reporting and editing by Janane Vekatraman; Polina Deitt)
(source: Reuters)