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Gold set to suffer its biggest weekly loss since 2006 as inflation fears fuelled by the Iran War
Gold was on course for its largest 'weekly loss' in six years on Friday as the escalating U.S. - Iran clashes pushed up oil prices. This increased inflationary pressures, and strengthened the case for higher U.S. rates. Gold spot was up 0.5% to $3,988.20 an ounce at 0313 GMT. It had been trading at its lowest level since July 1, earlier in the session. U.S. Gold futures for August delivery remained unchanged at $3,992. Metal prices have fallen 3.2% this week, the most since June 1. The ongoing Middle East tensions are outweighing support provided by softer U.S. June inflation figures that were released this week. Tim Waterer is the chief market analyst for KCM Trade. He said that despite the lower CPI and PPI numbers, traders couldn't rejoice over the lower inflation figures because of the recent spike in oil prices. Gold is still being held back by geopolitical concerns in the Middle East, primarily due to inflation and yield worries. Iran and the United States traded increasingly intense fire on Thursday, in an escalation lasting a week that has mostly unraveled last month's ceasefire. The oil prices have increased by about 12% this week, due to the limited oil flow out of the Strait of Hormuz. Tehran has asked the Houthi movement to be ready to close the Red Sea export route. Oil prices are on the rise, which could increase inflation fears and lead to a rate hike. In a high interest rate environment, non-yielding assets like gold tend to struggle as investors look for better-paying assets. Lorie Logan, the Dallas Federal Reserve president, became the first new Fed colleague of Chairman Kevin Warsh to publicly call for a rate increase. Fed Vice-Chair Philip Jefferson said he would be?open to raising rates in the event of a near-term decline in inflation. CME FedWatch Tool shows that traders are pricing in a 73% probability of an interest rate increase in December. Other than that, spot silver dropped 0.5% per ounce to $55.22, platinum fell 0.7% to 1,605.62, and palladium slipped 0.4% to 1 244.86. All three metals are headed for a loss this week.
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Seven & i shares rise 3% after Zabka convenience stores stake talks
Seven & i shares rose 3% on Friday in Tokyo after the Japanese retailer announced that it is in talks to buy a stake from Polish convenience store operator Zabka Group. Nikkei reports that the '7-Eleven owner may consider acquiring Zabka share held by funds. The investment is likely to be several hundred billion dollars (several billion yen). The deal would expand Seven & i’s reach beyond its strongholds of Japan and North America to Eastern Europe. This is part of the retailer’s efforts to grow under the leadership Stephen Dacus. Naoshi Matsumoto is an analyst with Yamawa Securities. He said that defensive sectors, centered on domestic demand, are being purchased amid overall market weakness caused by falling semiconductor stocks. Aeon, Japan’s largest retailer, rose 3%, while memory chipmaker Kioxia dropped 15%. Zabka (listed in Warsaw) which operates more than 13,000 shops in Poland and Romania rose 11% on the news. In 2021 Seven & i will acquire Speedway petrol stations, expanding its presence in the U.S. It has already opened outlets in three Nordic nations and has made Europe a "fourth growth pillar". Seven is struggling to improve their flagging business after a fight with Canadian competitor Alimentation Couche-Tard, who had attempted to buy it in what would have been Japan’s largest-ever overseas acquisition. Investors have been putting pressure on the retailer due to its lackluster returns. They also want it to focus more on its core business of convenience stores. Last year, it sold its supermarket business to Bain Capital. Bloomberg News reported that SoftBank Corp. and mobile payments provider PayPay were in talks about?investing several hundred billion yen into Seven & i, with Sumitomo 'Mitsui Card? also taking a stake. In a note, Bernstein analysts wrote that a partnership reflects a "history of digital 'defeat", and Seven & i is "buying 'takeover defense with shareholder money." The analysts stated that Seven is plugging the largest weakness it has with outside capital, and installing friendly investors as a countermeasure to a takeover.
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Oil prices rise on US-Iran hostilities intensifying and the threat of Red Sea closure
Oil prices rose slightly on Friday as the U.S., 'Iran and their broken truce limited oil flow out of the Strait of Hormuz. Tehran asked the Houthi movement if they were ready to'shut down the Red Sea export route. Brent crude futures increased $1.05 or approximately 1.25% to $85.28 per barrel by 0118 GMT. U.S. West Texas Intermediate Futures also rose $1.03 or 1.3% to $79.98 per barrel, erasing the losses from the previous day. Both benchmark contracts rose nearly 12% in the past week. Brent is on course for its third consecutive weekly gain, and WTI has a second weekly gain. The United States launched two large airstrikes in one day, mainly on targets near Iran’s southern coast. They continued to fire on Thursday. Fatih Birol, Executive Director of the International Energy Agency (IEA), said on Thursday that oil security was still a crucial issue at an event held by the Council on Foreign Relations in Washington. He said: "We should worry, and I'm worried, if things don't improve in the coming weeks." U.S. Central Command released a statement saying that U.S. Forces began "a new phase of strikes against Iran" for the "sixth consecutive evening to further degrade Iranian capabilities". This was at 2 pm EDT (1800 GMT), or 9:30 in Tehran. Tehran responded with missiles and drones that were targeted at U.S. bases in neighboring states. This included a barrage on a recently expanded air base in Jordan. Three sources said that Iran's leadership had warned its Houthi allies they would?close down the Red Sea oil routes if the U.S. struck?Iranian energy infrastructure. IG analysts stated that technically, WTI may test the mid $80s if the price holds above the key?support of the mid $70s. Separately Trump?Media and Technology Group announced a licensed, paid-for?data feed which will allow banks and trading firms to have "the fastest" possible access to posts by influential Truth Social accounts such as those of President Donald Trump, whose posts are often what move the oil markets.
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Oil prices drop as chipmakers pressure equity indexes worldwide
Equities around the globe fell Thursday, as investors sold off heavy-weight chips stocks. Meanwhile, the U.S. Dollar and Treasury yields increased after the latest economic releases as well as as the Middle East war intensified. Chip stocks fell from Asia to the U.S., as ?higher-than-expected 77% ?earnings growth from Taiwanese chip manufacturing giant TSMC was not enough to impress investors who have heavily leaned into technology stocks related to artificial intelligence. According to LSEG, the U.S. reporting season for the second quarter started well. Analyst expectations for quarterly earnings increased to 24,8% on Wednesday, from 23,7% last week. Tony Welch is the chief investment officer of SignatureFD. He said that high expectations can lead to short-term weakness. When you have a lot optimism on the market, you need to make sure that everything goes right. "Any negative news can cause the market to fall," said he. There's a great deal of confidence in the market right now. It's not necessarily a bad thing, but it creates a difficult hurdle for the market to continue going higher. The Dow Jones Industrial Average dropped 105.67, or 0.2% to 52,552.97. The S&P 500 also fell 38.63, or 0.5% to 7,533.77. And the Nasdaq Composite was down 387.28, or 1.5% to 25,881.95. The MSCI index of global stocks fell by 6.49 points (0.6%) to 1,121.65. The pan-European STOXX 600 closed at 0.16%. South Korea's KOSPI, a technology-heavy index, fell by more than 6%. Japan's Nikkei also closed almost 3% lower. The Philadelphia semiconductor index fell 4.3% in its second consecutive daily loss. The AI trade is no longer priced on growth. The price is based on 'perfection. Gene Goldman is the chief investment officer of Cetera, a California-based firm. "Any earnings report that is merely great instead of flawless gets sold," he said. OIL SLIPS WHILE WAR ESCALATES Iran, the United States and other countries exchanged fire Thursday, intensifying the attacks that have been ongoing since the weekend. This has largely undone the truce which halted the fighting last month. Iran has signaled that, while the two countries fight for control of Strait of Hormuz it may also pressure its Houthi ally in Yemen to shut the Bab al-Mandeb Strait, which is another important oil route, at the mouth of Red Sea. Oil futures continued to decline, with U.S. Crude falling 0.8% or 65 cents per barrel. Brent was down 0.85% or 72 cents. U.S. Retail sales rose 0.2% in June in line with expectations as lower gas prices affected receipts at service station. Consumers, however, continued to support the underlying spending. Initial weekly jobless claims fell to 208,000 seasonally adjusted, which was below the 217,000 economists had predicted. U.S. Treasury rates were modestly higher following these figures, which did not change investors' expectations about the?path? of interest rate changes from the Federal Reserve. The yield on the benchmark 10-year U.S. notes increased 1.44 basis point to 4.559% from 4.545% on Wednesday. Meanwhile, the 30-year bond's yield rose by 0.25 basis point to 5.0855%. The yield on the 2-year note, which is usually in line with expectations of interest rates from the Federal Reserve, increased 2.55 basis points, to 4.154%. The dollar rose against major peers despite being near its one-month low. This was due to expectations that the U.S. will continue to be resilient, and that Fed rates will stay the same this month. The dollar index (which measures the greenback versus a basket of currencies, including the yen, the euro and others) rose by 0.3% to 100.74 while the euro dropped 0.2% to $1.1441. The dollar strengthened by 0.1% against the Japanese yen to 162.37. Sterling fell 0.5% to $1.3475 after reaching a two-month high on Wednesday. Gold fell to its lowest level in two weeks after two sessions of gains. Spot gold dropped 2.1% to $3.976.24 per ounce, while spot silver fell by 3.8% to $55.56. (Reporting and editing by Thomas Derpinghaus Joe Bavier David Gaffen, Caroline Valetkevitch in New York, Chuck Mikolajczak, Marc Jones in London and Stella Qiu, Sydney)
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Oil price risks are renewed as tensions between Iran and the US renew FOREX Dollar.
Dollar held gains against major counterparts on Thursday. The dollar recovered from a near-month-low on expectations that U.S. economic growth will continue to be resilient, and the Federal Reserve would?hold rates stable this month. U.S. unemployment benefit filings dropped last week, suggesting continued stability in the labor market. Meanwhile, U.S. retails sales rose marginally as lower gas prices affected receipts at service station. When oil prices increase, the dollar is often the safest haven, displacing the euro and the yen. Uto Shinohara is a senior investment strategist with Mesirow Currency Management. "After earlier this week's CPI and PPI prints were weaker than expected, today's retail and claims data along with further intensification of the Middle East have provided modest support," he said. The World Cup and seasonal distortions have clouded today's data. Geopolitical developments continue to have a relatively limited market impact. Gains in the dollar, Treasury rates and oil are relatively modest so far. The oil price fell by 0.8% on Thursday to $84.29, but it is still near its 'highest level since mid-June. Marc Chandler, Bannockburn Capital Markets' chief market strategist, said that the dollar may be finding a safe haven bid. Since the beginning of the war, "Iran has always been a source of concern." Iran is showing that the U.S. has limits to its escalation. The U.S. Dollar Index, which measures the currency's performance against six other currencies, rose by 0.31%, to 100.76. It is off its lowest level since June 18, but remains on course for a weekly drop. The odds of a Fed rate hike in July were 10% compared to 45% implied probabilities at the beginning of the week. According to Fed funds futures via CME Group, the markets see a 48% chance of at least 25 basis points increase in September. ECB RATE PATH IN VIEW The euro dropped 0.23% to $1.1440, ending a two-day winning streak. Investors closely monitor European gas futures which are at their highest level since March. This has stoked concerns that higher energy prices could impact the euro zone's economy and hinder further appreciation of its currency. Markets bet on two more rate increases until 2027, and some economists are not ruling out an 'first move' next week. Carsten Brzeski said that some ECB officials may be more inclined to push for a rate increase after mentioning renewed escalation of the Middle East. Investors expect that Britain's new prime minister will appoint a fiscally conservative minister of finance. Sterling is retreating from a two-month high. The dollar increased 0.13% at 162.39 The dollar rose 0.13% to 162.39. Attention was focused on possible moves by Japan's Government Pension Investment Fund after Finance Minister Katsunobu Kato stated last week that the government wanted a "substantial increase" in domestic asset investments. Analysts have said that the GPIF is the most influential Japanese investor on the forex market. GPIF reviews its strategy every five years, and the latest review was completed in 2025. It can adjust its holdings if they are within the target allocation bands.
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Fuel shortage worries grow as US refiners record new profits
U.S. refining margins reached a new record on Thursday for the third straight session, as falling stockpiles and worsening Middle East tensions threaten to cause a potential shortage of fuel in the world's biggest consumer nation. U.S. refining companies have been the most benefited by the Iran War as foreign buyers have clamoured for their products, pushing the nation's fuel exports to new records. Fuel prices have risen sharply as a result of the 'domestic' fuel stockpiles being reduced. This has impacted consumer budgets during the summer driving season, and could pose a problem for Midwest farmers. The 3-2-1 crack is a spread that uses a 3-1-2-2 split. The benchmark used by U.S. refiners to measure profitability rose more than 2%, closing at $69.66 per barrel. This is a new record. Refiners use the spread traded at the New York Mercantile Exchange as a hedging tool to lock in profit margins. In recent months, U.S. refiners have been driven by diesel, which accounts for the largest portion of global oil consumption. The industrial fuel has been in short supply for many years because of refinery closures across the West. Middle Eastern export disruptions due to the Iran War also made the market more tight. A 'temporary ban on Russian exports' announced earlier this month further exacerbated global diesel shortages. U.S. Diesel stockpiles increased 4.5 million barrels to 102 million last week, but they were still "nearly 11,000,000 barrels lower than the level recorded on the 27th of February and about 8,000,000 barrels less than the seasonal average over the past five years," according to data released by the U.S. Energy Information Administration. The gasoline supply is also a cause for concern, as refiners in the U.S., and around the world, have reduced production of motor fuel to increase diesel and jet fuel. Since the beginning of the Iran War at the end February, the supply-demand imbalance in the United States has caused gasoline stocks to fall more than diesel. This has left motorists in the U.S. with sticker shock. EIA data shows that U.S. gasoline stocks fell by over 1.5 million barrels, to 210.5 millions barrels during the week ending July 10. This is a drop of over 42 million barrels from the week ending February 27, and a fall of 14 million barrels compared to the seasonal average for the past five years. EIA data shows that the motor fuel inventory is at its lowest level since 2012. Data from GasBuddy showed that the average U.S. retail gasoline price was $3.95 per gallon on Thursday. This is an increase of nearly 80 cents compared to last year. The data revealed that prices had risen to $4.56 a gallon due to disruptions in Middle East oil exports caused by the Strait of Hormuz blockade. The price of gasoline is one of the most visible indicators of inflation for U.S. customers. This makes the recent price increase a political anathema to U.S. president Donald Trump who has accused the oil companies without evidence. Analysts predict that U.S. drivers may have to endure even more pain before refiners focus on gasoline. John Kemp, an independent oil analyst based in London, wrote on Thursday to his subscribers that "encouraging refiners?to revert to max-gasoline will require higher prices for gasoline at both retail and wholesale levels as well as greater margins compared to other fuels." U.S. gasoline crack spread The price of oil settled on Thursday at $59 per barrel, the same level as in June 2022. The diesel crack spread The price of oil has reached a record-high level at $91 per barrel. Reporting by Shariq KHan in New York, Editing Liz Hampton
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Canada wildfire smoke blankets US Midwest and Northeast with hazardous orange haze
On Thursday, heavy smoke from hundreds of Canadian wildfires covered a large swath in the U.S., from the Midwest up to the Northeast. Officials warned residents to stay inside as much as possible, and avoid the unhealthy, acrid air. Detroit had the worst air pollution in the world according to IQAir. The company monitors the city's air quality. It registered a pollutionindex (or pollution index) of 600. This is twice the level that the U.S. Environmental Protection Agency considers "hazardous". Data from the federal government showed that smoke levels were dangerous in Minnesota, Michigan and northern Illinois. They also reached northern Ohio, and even into Ontario. Ten states, from Minnesota all the way down to Maryland, reported "unhealthy readings" in at least some places. Stephaine Villanova (33), a Chicago resident, was out on a stroll downtown with her father, aged 68, when she said, "It is wild, because you can't tell it from the outside. It looks like fog and you're completely covered in smoke. Both wore face masks. Emily Fischer, professor and atmospheric chemist at Colorado State University, said: "It is a river-like flow of smoke that's currently pouring into the Midwest." This is directly related to climate change. It is the climate change that people can breathe. Smoke was expected to?intensify throughout the day. The smoke was expected to worsen throughout the day. The dangerous conditions in New YorkCitymetropolitan were reported just days before Sunday's FIFA World Cup final, which was to be played nearby in New Jersey in front of more than 80,000 soccer fans. At a meeting on Thursday, New York City mayor Zohran Mamdani stated that "today is expected be the worst day for this event". At 'unhealthy levels', everyone, including people with heart disease, asthma, and older adults, may experience health effects. "Every New Yorker must take precautions today." The mayor announced that the city would be giving away?free face masks KN95 at?hundreds? of libraries, precincts, and firehouses. Officials reported 858 fires in Canada as of Thursday morning. Among them, 111 were considered to be out of control. The majority of fires are located in central Canada, specifically Manitoba, Saskatchewan and Ontario. According to data from the government, 5.9 million acres (2.4 million hectares), or roughly 5,9 million acres of land, have been burned in Canada during this "wildfire season". According to climate experts, rising temperatures around the globe are fueling an increase in wildfires. Wildfire smoke is more toxic than regular air pollution because it can linger in the atmosphere for weeks, and travel thousands of miles. Studies have shown that wildfire smoke is linked to higher rates of heart attacks and strokes. It has also been associated with cancer, pregnancy complications, and weakened immunity defenses. Reporting by Joseph Ax, Eric Cox, Caroline Stauffer, Wa Lone and Andrew Hay from New Mexico; Additional reporting by Andrew Hay and Steve Gorman in Toronto and New Mexico; Writing and editing by Mark Porter and Nick Zieminski.
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As US interest rate hikes are boosted by Middle East tensions, gold falls 2%
On Thursday, gold fell?2%, to a?two-week low, as rising Middle East tensions drove up oil prices and U.S. Treasury rates, causing inflation fears and reinforcing expectations for higher U.S. Interest Rates. Gold spot was down 1.9% to $3,984.64 an ounce at 2:05 pm EDT (1400 GMT), after having fallen as much as 2.2% earlier in the day and reaching its lowest level since July '1 during that session. U.S. Gold futures settled at $3,992.10 by 1.5%. Oil prices were near their highest level in a month as worries about Middle East energy supplies grew after Iran told Yemen's Houthis that they would be ready to shut down?the Red Sea route for oil if the U.S. struck Iranian power infrastructure. The higher oil prices fuel inflation fears, increasing expectations of high?interest rates. Gold's appeal as an asset that does not yield returns is also diminished. Bart Melek is the global head of commodity strategies at TD Securities. He said that oil prices have risen yet again. With the higher Brent levels there are expectations for a possible rate hike in September. According to the CME FedWatch Tool, traders are pricing in a 53% probability that the Federal Reserve is likely to?raise rates in September. The yields on the benchmark U.S. Treasury 10-year note have been moving higher. The U.S. Dollar gained 0.2% making bullion more expensive for foreign buyers. Fed Chair Kevin Warsh declared this week his 'determination to bring down inflation without revealing how. Data released on Tuesday revealed that U.S. Consumer inflation decreased in June. Meanwhile, data from Wednesday showed a decrease in the Producer Price Index. Even if the Fed adopts a more dovish position, the persistently high price of energy would make it hard for them to do so. Fawad Rasaqzada is a market analyst with Forex.com. He said that investors prefer the dollar 'over zero-yielding metals. Spot silver fell 3.6% to $55.68 an ounce. Platinum dropped 3.1% to 1,621.83 and palladium declined 4.1% to 1,260.70. (Reporting and editing by Diti Pjara and Jonathan Ananda in Bengaluru)
US and Australia invest $2 billion to advance Alcoa Gallium Project (October 21).
As part of an important?minerals deal aimed at countering China’s?hold?over the industry?, the United States and Australia provided financial support to a number of Australian companies. The shares in these firms rose sharply on Tuesday.
The deal between U.S. president Donald Trump and Australian prime minister Anthony Albanese commits the two countries to investing at least $1 billion in each of the next six month's mining and processing projects, and to setting a floor price for essential?minerals. This is a move long sought after by Western miners.
The U.S. Export-Import Bank said it had sent seven letters of interest (LOIs), totaling?more than 2.2 billion dollars, to advance U.S.-aligned vital minerals projects in Australia.
The LOIs were sent to Arafura Rare Earths and Northern Minerals. EXIM stated in a press release that these LOIs represent the next step in securing minerals for American manufacturing, national security and other strategic industries.
Arafura shares were up 8% this morning, while Northern Minerals, Latrobe Magnesium and VHM rose 11%, 15 % and 20 % respectively. Sunrise, however, was trading at a lower price. This compares to a 0.7% gain in the broader market.
The governments also said that they would help Alcoa, a U.S. aluminium company, to advance its plan to build a galium plant in Western Australia alongside its alumina refining facility. This could provide up to 10% of the global supply of gallium.
Alcoa shares listed in Australia rose 8% after the announcement.
The semiconductor and defense industries, in particular, rely on the gallium recovered as a byproduct of the alumina refinement process.
Australia announced in a statement that it would provide concessional equity funding of up to 200 million dollars for the project. This includes offtake rights for Australia's government. The U.S. would also invest in equity with offtake rights.
Alcoa signed a joint-development agreement for the project in August with Japan Australia Gallium Associates, a venture between Sojitz Corp and the Japanese government.
Alcoa and a special purpose vehicle, owned by the U.S. government and the Australian government, are expected to form a joint-venture with JAGA, to build the plant.
(source: Reuters)