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Gold nears two-week high amid Fed rate cut bets
The dollar rose on Tuesday, but gold prices were still near their two-week highs on the back of growing expectations that U.S. rates will be cut in September. By 0919 GMT, spot gold was down 0.2%, at $3,365.45 an ounce. Bullion reached its highest level since July 24 at $3,385.29. U.S. Gold futures were unchanged, at $3.423.20. The dollar index increased by 0.2%, from the one-week low reached earlier in session. This reduced gold's appeal for other currency holders. U.S. data released on Friday revealed that employment growth in the United States was slower than expected in July. Payroll revisions for both May and June reduced previous job totals by a staggering 258,000. CME FedWatch now places the odds of a cut in September at almost 88%. This is up from 63% just a week ago. The markets are pricing at least two quarter point reductions for this year. What gold probably needs to move up from here is (another) weaker U.S. Economic data... Gold is also watching who U.S. president Trump names to be the next Fed governor, possibly as the successor to Federal Reserve chairman Jerome Powell," says UBS commodity analyst Giovanni Staunovo. The uncertainty was heightened by Trump's decision to dismiss the chief of labour statistics following the disappointing payrolls report. He also announced that he would appoint another Fed governor. Trump has also threatened to raise tariffs on Indian products beyond the 25% increase last month, citing India’s continued purchase of Russian oil. In a low interest rate environment, gold, which has long been viewed as a safe-haven asset in times of economic and political uncertainty, performs very well. Kelvin Wong is a senior market analyst at OANDA. He said: "I do not expect traders to push up above $3,450 unless there's a clear catalyst." Silver spot rose by 0.2%, to $37.46 an ounce. Platinum fell 1.3%, to $1.312,30, and palladium lost 1.6%, to $1187.04. Sibanye Stillwater, a South African miner, has asked the United States for consideration of imposing a tax on Russian imports of palladium to ensure the viability and long-term sustainability of U.S. supplies.
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The scorching heat of Iran has forced the closure of banks, public buildings and other institutions
Local media reported that a heatwave in Iran has caused the country's power and water supplies to be stressed. The authorities ordered the closing of banks and public buildings in the capital Tehran on Wednesday. Nine of the 31 provinces in the country are on orange alert until at least next week. Some areas will see temperatures as high as 50 degrees Celsius. In the summer, Iran experiences high temperatures. However, reservoirs have been depleted by repeated droughts. Also, electricity is not able to keep up with air conditioners in offices and homes. Local media reported on Tuesday that the closure of banks, government buildings and other public structures on Wednesday will also affect the capital and the provinces of Mazandaran Markazi Yazd Semnan Kermanshah Razavi Khorasan and Yazd. The state broadcaster IRINN reported that Tehran Governor Mohammadsadeq Motamedian said: "Due the rising temperatures and the need to optimise and manage energy consumption, all executive agencies will be closed Wednesday." All medical facilities, selected private companies and bank branches will be open. Last week, Iranian president Masoud Pezeshkian said that excessive water use in the country was unsustainable and could lead to severe shortages of water by September. This would include Tehran. In July 2024 during another heatwave in Iran, many provinces decided to close their public offices to conserve water and electricity. (Reporting and editing by Helen Popper; Dubai Newsroom)
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Russian seaborne diesel exports fall in July, data shows
According to LSEG data and market sources, Russia's seaborne gasoil and diesel exports dropped 5% from the previous month to 3.26 million metric tonnes due to lower production during refinery maintenance as well as strong domestic demand. In July, diesel loadings through the Russian Baltic port Primorsk - the country's largest outlet for ultra-low sulphur (ULSD) exports – totaled 1,26 million tonnes, down 11.3% daily from June. Shipping data shows that last month, the two main importers of Russian gasoil and diesel were Turkey and Brazil. The export of diesel and gasoil from Russian ports to Turkey decreased by 14% in July, to 1.25 millions tons, from June. Loadings to Brazil fell 29% to 0.37million tons. Shipping data revealed that more than 400,000 tonnes of diesel, loaded in Russian ports, are headed to ship-to -ship transfers near Limassol, the Cypriot Port, for discharge or for orders for other destinations, as yet unknown. According to LSEG, the Russian exports of diesel and gasoil to African countries in July decreased by a quarter compared to the previous month, to approximately 0.69 million tonnes. The top importers were Morocco, Senegal Ghana and Libya. Shipping data showed that ships loaded with diesel in Russian port in May, weighing approximately 110,000 tonnes, had their destinations marked "for orders", meaning they have not yet declared or are not aware of their discharge point. Reporting by In Moscow. Mark Potter is the editor.
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Guinea withdraws its mining concession from Emirates Global Aluminium, a statement states
Guinea has transferred the concession for bauxite to a newly-created state-backed company, citing violations to its mining code. This move escalates the standoff regarding refinery construction, and highlights the push by militarily-ruled countries of West Africa to regain control over strategic minerals assets. EGA started operating in Guinea in 2019. It exported 14 million metric tonnes of bauxite by 2022. EGA operates in Guinea through its Guinea Alumina Corporation subsidiary. This concession covers 690 square kilometres and contains 400 million tonnes worth of bauxite minerals. According to the decree issued late Monday, the concession will be transferred by local state-backed company Nimba Mining SA. EGA and GAC did not immediately respond to a comment request. EGA is in dispute with the Government of Guinea, since October last fall when the authorities suspended its bauxite mining and export operations. In March, it said that the suspension of activities in Guinea led to a decrease in exports of bauxite from 14,1 million metric tons of wet bauxite by 2023 down to 10,8 million metric tons in 2024. The world's second largest producer of bauxite (the raw material for aluminum) is Guinea. Saliou Samb (Reporting and Writing by Maxwell Akalaare Adombila, Editing by Robbie Corey Boulet)
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Stocks surge on Fed rate-cut hopes following disappointing jobs data
Investors raised their bets that the Federal Reserve will act to support the world's biggest economy. Global stocks rose again on Tuesday. U.S. stocks rallied Monday, boosted by generally positive earnings reports. Bets on a Fed rate cut in September increased after Friday's disappointing jobs report. The oil prices fell after OPEC+ increased their output, and gold was hovering near a week-high. Rodrigo Catril is a senior currency strategist with National Australia Bank. He said that there are signs of weakness within the U.S. The STOXX 600 index rose 0.4% to start the day in Europe. This is the second consecutive day that the STOXX 600 has been up. The question is: Is bad news bad (economy slowing) or is it good (Fed moving toward rate cuts)? Mohit Kumar, a Jefferies strategist, said that the answer depends on whether or not bad data is being reported and what is priced in. "A modest slowdown in the economy is good news, as the Fed should ease up more." A sustained and sharp increase in unemployment rates, however, would be a concern as it could affect growth and earnings. The dollar rose modestly against the Japanese yen, rising by 0.1% at 147.23. Meanwhile, the euro dropped 0.1%, to $1.1559. The dollar index (which tracks the greenback's value against a basket six other currencies) rose 0.2% following a two-day drop. The soft U.S. payroll data on Friday added weight to the argument for a Fed cut, and gained another level of drama when President Donald Trump fired the director of labor statistics who was responsible for these figures. CME Fedwatch says that the odds of a rate cut in September are now at 94%. This is up from 63% on July 28. The market participants expect at least two quarter point cuts before the end of the year. The news that Trump will fill the Fed governorship early has also added to concerns about a politicization of rate policy. Trump threatened again to increase tariffs on Indian goods above the 25% level announced by Trump last month, due to India's Russian oil purchases. New Delhi, however called Trump's attack "unjustified", and pledged to protect its own economic interests. Oil prices fell for a fourth consecutive day as concerns about the economy's fragility and oversupply increased. Brent crude futures are now at $68.45 per barrel, near their two-week lows. It remains to be determined if the primary goal is to threaten secondary sanctions against India for its financing of Russia. This move could be a way to increase the U.S.'s leverage over India, forcing it to allow agricultural imports into its country or to commit to buying U.S.-produced energy. Investors are eagerly awaiting the earnings reports of Walt Disney, Caterpillar and other companies this week. Palantir Technologies' revenue forecast was raised for the second time in this year, as it expects to see sustained demand for artificial intelligence services. U.S. index futures rose 0.2% at the opening of trading, signaling a modest increase. The service sector in Asia's two largest economies has shown resilience. S&P Global's final services purchasing managers’ index (PMI), which measures the performance of the service sector in Japan, grew to 53.6 from 51.7 in the previous month. This was the largest increase since February. China's service sector expanded last month at the fastest rate in over a year. The final business activity readings for July will be released on Tuesday for the Eurozone, Britain and United States. Bitcoin fell 0.6%, to $114.235, and gold rose 0.1%, to $3.375 an ounce.
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Iron ore reaches a new high in China on strong demand
Iron ore futures rose on Tuesday, reaching a high of about a week. This was aided in part by the resilient demand for iron ore near-term from China, which is regarded as the world's largest consumer. Price gains were however limited due to the prospect of a possible restriction on steel production for the September 3, Beijing ceremony commemorating the 80th Anniversary of the End of World War Two. Chinese steelmakers, particularly those in the north, often restrict production before major events to ensure air-quality in Beijing. This could reduce appetite for raw materials including iron ore. The highest-traded contract for September iron ore on China's Dalian Commodity Exchange closed the daytime trading 1.2% higher, at 798.5 Yuan ($111.13), a metric tonne. This is the highest price since July 30. As of 0709 GMT the benchmark September iron ore traded on the Singapore Exchange had risen by 0.69% to $102.2 per ton. It earlier reached its highest level since July 30, at $102.65. Analysts at Shengda Futures, a broker, said that iron ore fundamentals remained strong due to a firm demand. This supported the price of this key ingredient in steel production. Since April, the average daily hot metal production, which is a measure of iron ore consumption, has hovered around 2.4 millions tons, even in July and August, when demand is typically low and output usually contracts. According to data from the consultancy Mysteel, the production will be around 2,21 million tonnes by the end August 2024. Analysts at ANZ noted that iron ore prices were also supported by the "hope" that efforts to address overcapacity problems in China's Steel Industry would ultimately improve demand. A second ingredient in steel production, coking coal, also jumped nearly 8%, hitting the daily limit amid fears of a reduced supply. A coal trader in Singapore, who spoke on condition of anonymity because he was not authorized to speak to media, said: "Any tiny news from supply could be amplified at this time and drive a sharp movement of price." Coke grew by 3.16%. The benchmark steel prices on the Shanghai Futures Exchange have increased. Rebar climbed by 1.38%. Hot-rolled coils grew by 1.89%. Wire rod jumped 2.06%. Stainless steel gained 0.9%. ($1 = 7.1851 Chinese Yuan) (Reporting and editing by Harikrishnan Nair, RashmiAich and Harikrishnan Nair)
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Japan records record temperatures; rice crops are threatened
The government has warned residents to stay inside and promised to take steps to reduce weather-related damage in rice crops. The readings in Isesaki in Gunma Prefecture in the east have surpassed last week's high of 41.2 C in Tamba, Hyogo Prefecture in the west. According to the Fire and Disaster Management Agency, over 53,000 people were hospitalized for heat stroke so far this summer. Takeshi Ishikawa (63), an auto worker in central Tokyo, said: "Today's sweltering hot." He was filling up his water bottle from a fountain. "If it reaches 42 degrees, that would be hotter even than the bath I prepare for 40 degrees." The average temperature in Japan continues to rise after reaching a record-high in July, for the third consecutive year. Meanwhile, the northeastern area along the Sea of Japan recorded critically low rainfall levels, causing concern over the rice crop. The government will adopt a new policy of increased rice production on Tuesday to avoid future shortages. Shinjiro Koizumi, the Minister of Agriculture in Japan, said during a press briefing that "we need to act quickly and with a sense a crisis to prevent damage". He said that the government would offer assistance for pest control, and to combat drought. The extreme heat of 2023 damaged the quality, leading to a severe shortage of rice last year. This was made worse by the government misreading supply and demand. This led to the price of rice, an important staple food, reaching historic highs. A national crisis was triggered. (Reporting and editing by Christian Schmollinger; Muralikumar Aantharaman, Kim Coghill, and Irene Wang. Additional reporting by Miyu Arishima and Irene Wang.
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Saudi Aramco second-quarter net profit drops 22% on lower revenue
Aramco, the Saudi Arabian oil giant, reported on Tuesday a 22% decline in its second-quarter profits, due mainly to lower revenues, and increased debt. The top oil exporter in the world reported a net loss of $22.7 billion for the three-month period ended June 30. This was below a median estimate of $23.7 billion provided by 17 analysts. Aramco’s average realized crude oil price for the quarter was $66.7 per barrel, down from $85.7 a barrel during the second quarter in 2024 and $76.3 a baril in the first three months of this year. Total borrowing increased to $92.9 billion by June 30, up from $74.4 billion a year earlier. Gearing, which is a measure of debt, increased to 6.5%, up from minus 0.3% one year ago and 5.3% in the previous quarter. The company has been a major cash cow for Saudi Arabia for many years. It confirmed the previously announced $21.3 billion total dividends in the second quarter. Of this, approximately $200 million is performance-linked, a system introduced in 2022 after the oil price boom following Russia's invasion in Ukraine. Aramco announced in March that it would pay out $85.4 billion as total dividends for 2025, a drop of 37% from the $124 billion paid out last year. As the company's cash flow shrinks, Aramco will reduce its performance-linked component by 98% to $900m. In the second quarter, free cash flow fell by nearly a fifth compared to last year. Reports last month indicated that Aramco was close to signing a deal with a group headed by BlackRock to raise $10 billion. The company is also considering selling five of its gas powered power plants in order to raise $4 billion. Riyadh is pressing the company to boost profits and payouts. Dividends are an important source of income for the Saudi government. It owns Aramco directly in 81.5% and through the PIF sovereign wealth fund, another 16%. This is especially true as the Saudi government spends money on diversifying the economy from oil. Last year, oil accounted for 62% of government revenue. According to the International Monetary Fund, oil prices must be at least $90 per barrel for the Kingdom to balance its budget in 2025. Brent crude oil, the global benchmark, was trading at $68.83 as of 0625 GMT. Reporting by Yousef Taba and Luke Tyson from Dubai; editing by Mark Potter and Christopher Cushing
Andy Home: Copper market suffers for forgetting its TACO-hedging:
The copper market has the tariffs right, but the products are wrong. The copper market was surprised by President Donald Trump’s announcement that he would "address the effects of imports of copper on America's security".
Imports of semi-manufactured copper products, such as wires and tubes, will face a 50% tariff starting Friday. The tariff will not be applied to refined copper until at least January 2027. If warranted, a gradual increase in the rate may then take place. The tariff trade that has dominated the copper market in February has collapsed. CME's U.S. Contract plummeted more than 20% after the news. This wiped out the high premium that was previously over the London Metal Exchange price.
The United States has a surplus of metal that it does not need, after traders shipped massive tonnages via the arbitrage gap. The copper market has forgotten Trump's tendency of backing down from his most extreme threats. To borrow a popular investor meme, it has been TACOed, which is short for Trump Always Chills Out.
Targeted Products for Copper
Tariffs on semifinished copper products are applied to between 400,000-500,000 metric tonnes of U.S. imports per year.
The United States imports a lot more refined copper. Last year, imports were just under 900,000.
Canada is by far the biggest copper supplier to the U.S. but there are many other suppliers. Copper tubes were imported from 32 countries last year.
Tariffs will be applied to all copper-intensive products, including cables, connectors, and electrical components. This is likely to include more suppliers.
The new tariff wall will be good for domestic processors - but only if their capacity is sufficient to cover what's currently imported.
In the next few months, we will know how many exemptions specific to products have been granted.
SCRAP WARS GET HOTTER
Export restrictions will also be placed on concentrates mined in the United States and recyclable copper.
A quarter of domestically-produced "copper input materials" will be required to be sold in the United States from 2027. This rate will increase to 30% in 2020, and then 40% in 2029. This may require more capacity than the three domestic smelters currently available, even if Grupo Mexico were to reactivate its idle Hayden facility in Arizona.
To encourage domestic recycling, "high-quality copper scrap" must also meet a minimum requirement of 25%.
The exact types of scrap that qualify for this measure are not known, nor is it clear how the measure will work in reality. However, the move represents an escalation of the simmering scrap battles. The European Union also considers export quotas for recyclable copper in order to stop "scrap leakage."
China is the primary target, as it is the largest purchaser of secondary raw materials in the world.
In 2024, the country imported 2,25 million tons copper scrap, the highest total ever since 2018, the first year that the authorities tightened the purity requirements on imported material.
Imports are already slowing down this year due to a drop of 42% in shipments coming from the United States because of the high CME premium.
The global scrap market is experiencing a growing resource nationalism, which will lead to structural changes in the recycling of materials.
Can we have our COPPER back now?
Not for refined copper as everyone expected.
The United States has now ceased to need the copper that was shipped by large trade houses. It may have been a lucrative trade for the companies involved, but it is no longer necessary.
CME warehouses now hold 232.195 tons of copper. This is the highest amount since 2004. Due to traders' last-minute rush to beat the August 1 deadline, metal is still arriving every day.
Tariffs have a huge impact on the supply chain of other countries.
China exported nearly 260,000 tons (or 78,800 tons) of refined copper from March to June. This is a significant increase over the previous four-month period.
A portion of the copper was delivered to meet a shortfall on the London Market caused by the raid of LME stocks on brands that could be shipped to the United States.
It was mostly non-Chinese steel that was shipped to the United States from warehouses bonded with non-Chinese metal.
Shanghai Futures Exchange's stocks have plummeted to 73 423 tons, their lowest level since last December, due to China's booming exports.
The physical supply chain may take longer to adjust than the futures trade.
Analysts have already run the numbers to see if it makes sense to reverse the flow of copper back out of the United States.
SAME TIME THE NEXT ANNUAL?
What is the end of the copper tariff?
Most likely not, as the reference explicitly mentions the option of a stepped tariff on imported refined copper starting at 15% in 2020 and increasing to 30% in 2030.
The outcome will be determined by the report on the domestic market that Commerce Secretary Howard Lutnick is scheduled to release at the end of next June.
It is also dependent on whether Trump decides to change his mind before then.
Tariff Man is a great way to find out.
These are the opinions of a columnist who writes for.
(source: Reuters)