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Rate cut bets are impacted by inflation worries as gold prices ease
The gold price fell a second time on Wednesday as inflation fears fueled by war weighed down on expectations of interest rate reductions. Markets were also looking forward to the upcoming summit between U.S. president Donald Trump and Chinese President Xi Jinping. At 12:38 pm EDT (1638 GMT), spot gold fell 0.3% per ounce to $4,701,50. U.S. Gold Futures rose 0.5% to $4 709.50. U.S. Producer Prices increased more than anticipated in April, posting their largest gain since early 2022. This is the latest sign that inflation has accelerated amid 'the Iran War. Peter Grant, senior metals analyst at Zaner Metals and vice president, said that "inflation is still sticky, so expectations of higher rates were reinforced." Gold is often seen as a hedge to inflation. However, higher interest rates tend to?pressurize the metal. TRUMP'S TRIP IN CHINA The data released on Wednesday shows that the U.S. consumer price index increased in April by a further 3%, and its annual rate has reached its highest level in three years. Last month, the U.S. Central Bank left its benchmark interest rate at 3.50% - 3.75%. According to CME Group’s FedWatch, traders have priced in a U.S. interest rate cut this year. Trump was in China to make deals, maintain the fragile trade truce between the world's second-largest economy and boost his public approval ratings, which were shattered by his war against?Iran. India has also increased import tariffs for gold and silver from 6% to 15% in an effort to reduce overseas purchases and relieve pressure on its foreign exchange reserves. India is the second largest consumer of precious metals in the world. Grant stated that the news of higher import duties has caused some?concerns about demand and could be a long-term headwind. Spot silver increased 3% to $89.13 an ounce, the highest level for two months. Platinum rose 2.8% to $2186.55 after reaching its highest level since the 12th of March. Palladium rose 2% to $1,521.12. Ashitha Shivprasad, Bengaluru. Alexander Smith and Alison Williams edited the article.
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Hungary summons Russian Ambassador over drone attacks on Western Ukraine
Hungary summoned Russia’s embassy over a drone strike on western Ukraine, said Prime Minister Peter Magyar?on Wednesday. Russia launched a drone attack against Ukraine on Wednesday morning, killing three people and damaging critical infrastructure. Magyar stated during a press conference held following the first cabinet meeting of the new Hungarian Government that the Russian ambassador was summoned on Thursday morning to the Foreign Ministry to meet with Anita Orban. Orban, who will attend the meeting, will ask the ambassador to tell him when Russia intends to end its four-year war with Ukraine. Orban had earlier said on Wednesday in a video posted on Facebook that Hungary "deeply condemns" Russian drone attacks on ethnic Hungarian regions in western Ukraine. The Russian embassy in Budapest has not responded to an immediate request for comment. A request for comment from the Russian embassy in Budapest was not immediately responded to. Even after the 'Russian invasion of Ukraine' in 2022, Viktor Orban’s former government maintained close ties with Moscow. (Reporting and writing by Gergely szakacs, Jason Hovet, Anita Komuves. Editing by Kirsten Dnovan.)
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Four workers injured in a fire at Cajamarquilla Zinc Smelter, Peru
The fire that broke out at the Cajamarquilla Zinc Smelter of Nexa Resources in Peru on Wednesday has been brought under control. However, several workers were injured. Nexa sent a message to its workers in which it said that three Hitachi workers and one of their own employees were affected. The company reported that three of the injured people were transported for treatment and evaluation, and were in stable condition. A fourth person was treated on-site. Nexa has evacuated its workers as a precaution from the affected area and activated safety and emergency protocols, with local firefighters' support. The company said that the cause of the incident was under investigation. According to local media, the fire started at?7.17?a.m. Local time (1217 GMT), the fire broke out at Cajamarquilla in Lurigancho-Chosica east of Lima. It affected electrical equipment?at a substation. Cajamarquilla has the largest zinc smelter in Latin America. The firm has set aside?around $22 millions for renovations on the site by 2026. (Reporting and editing by Kyry Madry and Marco Aquino)
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Moscow authorities restrict the publication of photos and video of the aftermath of drone strikes
The office of Sergei Sobyanin, Moscow's mayor, announced on Wednesday that the city has imposed restrictions on the publication and distribution of images and videos depicting the 'aftermath' of "terrorist attacks", including drone strikes. A directive posted on the official website of the mayor, referring the "Anti-Terrorist Commission", stated that the order was intended to "prevent the dissemination of unreliable or false information". The law prohibits the media as well as individuals and emergency services from publishing pictures or videos depicting "terrorist attacks", including drone attacks, until these images or videos appear on the websites of either city governments or defence ministries. The order stated that "the restrictions apply also to the consequences of unmanned aerial vehicles or other means of destruction used to harm citizens' lives and health, or to damage property, including critical infrastructure." The?restrictions?did not apply to public announcements that are intended to maintain order. It said that violations would be punished by fines between $400 and $680, but much higher amounts for 'officials' or 'legal entities. Similar bans have been imposed in other parts of Russia.
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Libya plans to restart Ras Lanuf Oil Refinery within one year, NOC reports
Masoud Suleman, chairman of the National Oil Corporation in London, told reporters that Libya plans to restart its 220,000 barrels-per-day Ras Lanuf refinery within six to twelve months to supply the domestic market. Since 2013, the refinery, Libya’s largest, was idle due to an arbitration dispute between Trasta and NOC, its Emirati partner. NOC announced on Monday that it had signed an agreement to end the partnership with Trasta, and transfer full control of the Ras Lanuf refinery and complex to Libyans. Suleman said that the budget for the restart was already allocated. He added that NOC had the necessary manpower and equipment to maintain the system, which, he estimates, will cost around $60 million. Since the NATO-backed 2011 uprising which toppled Muammar Gadhafi, Libya's oil industry, its main source of revenue, has been repeatedly disrupted by local and wider political unrest. The Zawiya refinery, which produces 120,000 bpd, was forced to close last week due to clashes in the area. Suleman stated that?output?from Ras Lanuf will primarily serve the domestic market, and be sold by Brega Oil Company?a NOC subsidiary. NOC anticipates an initial run rate of about 200,000 barrels per day, and will gradually ramp up to full capacity. The refinery will run on Libyan Amna crude grade. Reporting by Ahmad Ghaddar, Shadia Nasralla. Ahmed Elumami contributed additional reporting from Tripoli. Editing by Philippa Faletcher and Mark Potter
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What has been the impact of the Iran War on Middle East countries?
LONDON, MAY 13 - Since the massive Israeli-U.S. airstrikes against Iran began on February 28, the war has ravaged infrastructure and economies in the Middle East and thrown into disarray long-held assumptions about regional security. In March, Israel launched an invasion of Lebanon and a bombing campaign to pursue Hezbollah militants who had fired across the border as a show of solidarity with Iran. Here's how certain countries have been affected: The attacks killed Ayatollah Ayatollah Khamenei, the Supreme Leader of Iran and many other top officials and military generals. However, the ruling system remains as firmly entrenched as before. Khamenei’s son has replaced him and?the Revolutionary Guards are more powerful than ever. Thousands of Iranians died in six weeks of U.S. and Israeli airstrikes. This included scores of children who were in a school that was hit on the first day of the war. Although 'the war' began only a few weeks after authorities had killed thousands of protesters to quell a popular uprising there have been very few signs of domestic organised opposition since. The Iranian closure of the Strait of Hormuz proved effective in deterring further attacks. Iran may still possess over 400 kg (900 lbs) of highly-enriched uranium, which the United States demands it give up. The U.S. and Israeli strikes on Iranian ports and the blockade have caused massive damages, putting Iran's economy at risk and causing further unrest. Iran's attacks against Gulf states and Israel’s continuing assault on Lebanon's Hezbollah could also make Tehran more isolated within the region. ISRAEL Israel's military has been successful in targeting Iranian military commanders, military installations, and most of the incoming Iranian missiles. However, some have made it through. The original war goals are still far from being achieved. The?Islamic Republic is still standing. Its long-range missile and drone arsenals remain a threat to Israel, and its nuclear program can still be salvaged. Israel's strategy in Lebanon has been to inflict heavy losses on Hezbollah, and to create a buffer zone within Lebanese territories. It believes this is vital for the protection of its borders. However, it could lead to an occupation that lasts indefinitely with no prospects of peace. Israel's decision, coming after the international condemnation of the Gaza conflict that devastated the global economy, to launch a military campaign that hit the global economic system may damage ties with important allies in the West. LEBANON Lebanon, with thousands of deaths, has suffered greater damage and losses than any other country. Israel's attack initially forced a quarter the population to leave their homes. Although some people have returned, large swathes in the south are still depopulated and under Israeli control. Israel continues airstrikes in Lebanon despite an April ceasefire. Israeli invaders have destroyed entire villages in the southern part of Lebanon. The United States and Israel have increased pressure on the government in order to disarm Iran-backed Hezbollah. This could worsen sectarian tensions in a nation still scarred by the civil war of 1975-1990. The group is deeply rooted among Lebanon's Shi'ite Muslim community, but some other members of the?community resent its role in bringing Lebanon back to war. UNITED ARAB EMIRATES The UAE has been hit harder than any of its neighbours by Iran's strikes on Gulf States in response to U.S. and Israeli attacks, including civilian infrastructures and energy facilities. In response, the UAE has redoubled its efforts to strengthen its ties with Israel and the United States. It normalised their relations with Israel in the Abraham Accords 2020. It has called for a hard line to be taken in any future peace talks with Iran. The UAE, unlike many of its Gulf counterparts, has a pipeline which allows it to divert oil exports to avoid the blocked Strait of Hormuz. This makes it better able to endure prolonged disruption. The war could damage its position as a regional economic hub that provides security and ease to the region. SAUDI ARABIA Saudi Arabia is the largest, wealthiest and most powerful of all the Gulf monarchies. It has a pipeline which allows it to export much of its crude oil from the Red Sea. This allows it to take advantage of high prices and compensate for the loss of shipments that are blocked in the Strait of Hormuz. The long-term damage caused by the war could undermine Crown Prince Mohammed Bin Salman's Vision 2030 plans, which are the most ambitious economic plans, but have been increasingly scaled back. The war in the long term has raised serious questions about Riyadh’s foreign and security policies, especially its decades-long reliance on the United States as its main military ally, and its 2023 detente agreement with Iran. Qatar, despite having built bridges to Tehran, has no export route around the Strait of Hormuz and had to stop production of liquefied gas which is its main source for wealth. Qatar was hit by one of the worst Iranian attacks in response to Israel's attack on Iranian energy targets. The North Field gas facility, which will require years of repair, was severely damaged. As with other Gulf States, the country hosting the largest U.S. Air Base in the Middle East faces a dilemma over regional security policies once the dust settles. This is especially true if Iran tries to extend its control over Strait of Hormuz. Houthi, the Iran-aligned group in Yemen that controls the capital and the most populous parts of the country, has remained out of the conflict despite concerns that they could intensify Iran's closing of the Strait of Hormuz if they fired on ships at the mouth of Red Sea -- the other maritime chokepoint of the region. It is not clear why the Houthis are being so restrained, and their stance may change. It is closer to Iran than Lebanon’s Hezbollah and appears focused on a Yemeni civil war ceasefire with groups supported by Saudi Arabia, its former arch enemy. The 'economic impact' will be dire, as the Strait of Hormuz closure will cut off most of the oil exports, which represent almost all of the government's income. Iraq, the only country in this region to be so closely aligned both with the United States as well as Iran since its Shi'ite government was established after the U.S. led invasion in 2003 has been on a difficult path. Baghdad is increasingly being pressured by Washington to crack down on the powerful Iran-backed militias that have become more assertive. KUWAIT Kuwait, another rich energy producer without a route out of Gulf except the Strait of Hormuz has seen its export revenue drop to almost zero. Although it has never been as assertive as Saudi Arabia or the UAE, Kuwait has just as much to gain from a prolonged disruption as any other country. (Compiled by Angus McDowall, edited by Peter Graff.
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The dollar and bond yields are rising as US inflation is on the rise. Global equity markets are modestly up with this.
MSCI's global equities index advanced with the dollar Wednesday. U.S. treasury yields also saw a slight increase as investors evaluated hotter than expected inflation data, all while waiting for a meeting between U.S. president Donald Trump and China's Xi Jinping. U.S. producer price increases were higher than expected by the Bureau of Labor Statistics at the Labor Department in April, marking their largest increase since early 2022. The latest economic impact of the U.S. and Israeli war on Iran was evident in Tuesday's U.S. consumer price data, which showed that energy costs accounted for the largest increase in the last three years. Jim Baird is the chief investment officer of Plante Moran Financial Advisors. He said that this data was a further source to increase the concern about inflation. You're seeing the reactions in stocks and bonds as a result of an increase in yields. This is one of two key narratives, and probably the biggest concern for investors in near-term. There are two opposing forces at play, namely the inflation concerns and their implications for Fed policy. The upside for stocks was a strong earnings season, even though it was more concentrated in tech stocks and AI-related stocks. Elon Musk and Nvidia's Jensen Huang were among the entourage of President Trump who received a warm welcome on Wednesday in Beijing as he prepared to ask China’s Xi Jinping for "openness" towards U.S. businesses at the beginning of their two-day meeting. Trump stated on Tuesday that he didn't think he needed China's assistance to end the Middle East conflict. "What we will hear is that the meeting was productive. In reality, the progress will be more limited. My expectations would be realistic. Baird, of Plante Moran, said: "You have to be." Wall Street was buzzing at 11 a.m. The Dow Jones Industrial Average fell by 258.37, or 0.5%, to 49.502.19; the S&P 500 gained 10.15, or 0.1%, to 7.411.11; and the Nasdaq Composite gained 163.96, or 0.6%, to 26249.15. The MSCI index of global stocks rose by 2.91 points or 0.26 percent to 1,106.23. The pan-European STOXX 600 Index rose by 0.64%. On Wednesday, the longer-dated bond yields hit their highest level since July after producer prices rose faster than economists expected in April. Then, they eased as traders assessed the likely impact of Fed policy. The yield on the benchmark U.S. 10 year notes increased 1.7 basis point to 4.489% from 4.471% on Tuesday. Meanwhile, the 30-year bond rate rose 2.1 basis to 5.0484%. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve rose by 1.3 basis points, to 4.009%. The dollar grew on Wednesday after the latest U.S. inflation report, and investors were focused on the upcoming talks between Trump Xi and China's Xi. The dollar index (which?measures greenback against a currency basket including the yen, the euro and others) rose by 0.19%, to 98.51. Meanwhile, the euro fell by 0.25%, at $1.1708. The dollar gained 0.16% against the Japanese yen to reach 157.86. It had briefly surged on Tuesday due to "rate-check" speculations, which are often seen as a prelude to an intervention. The British pound fell 0.16%, to $1.3515, as the Prime Minister Keir starmer's hold on power began to wane. After a rally on Tuesday, oil prices have been mixed. International Energy Agency has said that global oil supply this year will be insufficient to meet demand, due to the Middle East war which is destroying oil production. Both sides have failed to reach an agreement on ending hostilities, while Israel has intensified its attacks in Gaza over the past five weeks. Some ships were able to cross the Strait of Hormuz. U.S. crude climbed 0.87% to $103,07 per barrel. Brent dropped to $107,67 per barrel on the same day. Spot gold dropped 0.72%, to $4,679.79 per ounce. U.S. Gold Futures increased 0.04% at $4,679.60 per ounce. Reporting by Sinead carew and Elizabeth Howcroft. Clarence Fernandez and Mark Potter edited by Keith Weir.
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Italy's Ludoil purchases Sicilian oil refinery as war threatens Europe fuel supply
G.O.I., a Cypriot private equity fund, has agreed to purchase the Sicilian oil refiner ISAB. The Italian group Energy said Wednesday that the Iran War has revealed Europe's dependence on the Gulf to supply jet fuel and refined products. Ludoil is the jet fuel supplier to Rome's Fiumicino airport. The Morattis family of Italy and the Brachetti Perettis family in Azerbaijan sold their oil refineries recently to Vitol, a commodity trader. Ludoil had already begun discussions with G.O.I. When the United States and Israel struck Iran on February 28, they used ISAB to generate energy. Ludoil was founded in 1954 by Donato Ammaturo's grandfather. The new entity, which is Italy's largest privately-held multi-energy firm, will have consolidated revenues of more than 10 billion euros (11,7 billion dollars). The acquisition will enable ISAB to evolve from a refinery to an energy company. This will enhance competitiveness, supply security and the development new value chains in energy. Ludoil stated that it would integrate ISAB into its portfolio, which included coastal storage terminals and a fuel retailer network. It also hoped to develop a biofuels business for the refiner. The deal is divided into two phases. In the first, Ludoil will acquire a 51 percent stake in ISAB. This acquisition is subject to a number of conditions, including the approval from the Italian government, under the so-called golden powers regime. Ludoil has not revealed how much money it will pay for the stake. It also did not respond immediately to requests for more information. ISAB, which accounts for over 20% of Italy's refinery capacity, is considered by the government to be a strategic asset. G.O.I. Energy? Bought from Russia's Lukoil by 2023. Ludoil has not said whether the existing agreement between Trafigura and Ludoil for 'the supply of raw material and 'the purchase of finished goods will remain in place. According to a person with knowledge of the deal, Trafigura will keep its contract for supply and offtake with ISAB's Priolo refining facility.
Greenland's Siumut Party withdraws from the ruling coalition
Greenland's Siumut Party has withdrawn from a 'coalition' government, said the Prime Minister 'on Friday. This weakens efforts to present an united front against U.S. president 'Donald Trumps' 'campaign' to 'take control of the Arctic Island.
The party's departure comes after Siumut chair Aleqa Hammond warned that it would leave if two Greenlandic Ministers declared candidacies in the March 24 Danish parliamentary elections without a prior "leave".
Greenland's Premier Jens-Frederik Nie expressed disappointment, but stated that his "government" would continue. He stressed the importance of good governance in a time of increased global scrutiny.
He told reporters: "It's terrible timing, and I'm frustrated and disappointed because it's happening at a time we should be standing together."
He said that foreigners would be attracted by anything that looked like a division in the country. We should avoid this at all costs.
The broad coalition was a cornerstone in?Nielsen?s strategy for responding to Greenland?s worst time since recent history, as he called it.
According to KNR, Siumut’s departure means that Greenlandic Minister of Foreign Affairs Vivian Motzfeldt is leaving the post. She has reportedly played a 'key role' in diplomatic discussions with the United States.
The government's majority is not threatened by the loss of support from 'Siumut,' which has four seats in Greenland’s Inatsisartut Assembly, with its remaining 19 seats.
Greenland is set to elect two new members of the Danish parliament in the coming weeks. (Reporting and editing by Terje Solsvik, Louise Rasmussen and Stine Jacobsen)
(source: Reuters)