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Gold reaches $4,100 on the back of trade tensions and rate-cut optimism
On Monday, gold broke through $4100 per ounce, a new record, on renewed U.S. China trade tensions, and on expectations of U.S. rate cuts. Silver also reached a record high. As of 12:17 pm, spot gold had risen 2.4%, to $4,114.31 an ounce. After hitting a new record of $4,116.77 at 1617 GMT ET (1617 GMT), gold prices have risen 2.4% to $4114.31 per ounce. U.S. Gold Futures for December Delivery rose by 3.3% to $4133.90. Gold prices have risen 56% in the past year, and last week they reached the $4,000 mark for the first. This is due to factors such as geopolitical uncertainty, economic concerns, and expectations of U.S. rate cuts. Central bank purchases are also a major factor. Gold could continue to rise. "We could see prices above $5,000 by 2026," said Phillip Streible. Chief market strategist at Blue Line Futures. Streible said that the structural support of the market is provided by the steady central bank purchases, the firm ETF inflows as well as the U.S. China trade tensions. Streible added that on the geopolitical side, U.S. president Donald Trump reignited the trade tensions between China and the United States last Friday, ending a tense truce. While traders price in a 97% chance of a Federal Reserve rate reduction in October, and a 100% probability for December. Gold is a non-yielding investment that tends to perform well in environments with low interest rates. Bank of America analysts and Societe Generale expect gold to hit $5,000 by 2026. Standard Chartered's forecast has been raised to $4,488 on average next year. Standard Chartered Bank's global head of commodities research, Suki Cooper said: "This rally is strong, but a short-term correction will be better for a long-term trend." Spot silver increased 3.1% to $51.82, reaching a record high earlier in the session of $52.07. This was boosted by the same factors that supported gold and tightness on the spot market. Technical indicators indicate that both gold and silver are overbought. The relative strength index (RSI), which measures the strength of the relationship between two assets, is 80 for gold. Palladium rose 6.5%, to $1496.52. Platinum gained 5%, to $1666. Reporting by Noel John in Bengaluru, Pablo Sinha in Mumbai and Sherin-Elizabeth Varghese; Additional reporting and editing by Joe Bavier & Alexander Smith.
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Trump will meet Zelenskiy this Friday to discuss air defense and new weapons
Three sources familiar with the plans said that President Donald Trump would meet Ukrainian President Volodymyr Zelenskiy for a luncheon on Friday. The meeting comes amid increasing discussions over the possible provision of Tomahawk long-range missiles to Kyiv. Both leaders met on Saturday and Sunday. A high-ranking Ukrainian delegation, headed by Prime Minister Yulia Shvyrydenko is scheduled to arrive in Washington, DC, before Friday's meeting, to prepare the groundwork for their talks. One of the sources, who requested anonymity, as the visit had not been announced publicly, stated that the main topics would be air defense, additional U.S. arms for Kyiv, and Russia's possible return to the negotiation table. Zelenskiy is lobbying Washington for the supply of U.S. Tomahawk missiles that can hit Moscow but are only used on military targets, according to Ukrainians. Moscow said that such a move could be a significant escalation. Trump said that he was considering sending Tomahawks into Ukraine. He also stated that he may speak to Russian President Vladimir Putin. Ukraine and the U.S. also appear to be closing in on an historic drone deal, in which Ukraine will share drone technology with United States. European diplomats view such a deal to be an important tool in keeping the volatile U.S. President engaged and supportive of Ukraine. Reporting by Steve Holland in Washington, Tom Balmforth and Gram Slattery from London. Editing by Jeff Mason & Matthew Lewis.
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Gold reaches $4,100 on the back of trade tensions and rate-cut optimism
On Monday, gold broke through $4100 per ounce, a new record, on renewed U.S. China trade tensions, and on expectations of U.S. rate cuts. Silver also reached a new high. As of 10:50 am, spot gold had risen 2.1%, to $4,099.55 an ounce. After hitting a new record of $4,103.58 at 1450 GMT ET, gold prices rose 2.1% to $4099.55. U.S. Gold Futures for December Delivery rose 3% to 4,120.10. Gold prices have risen 56% in the past year, and last week they reached the $4,000 mark for the first. This is due to factors such as geopolitical uncertainty, economic concerns, and expectations of U.S. rate cuts. Central bank purchases are also a major factor. Jeffrey Christian, managing partner of CPM Group, said that gold and silver prices rise when investors become concerned about the current state of the economy or politics. Donald Trump, the U.S. president, reignited the trade tensions between China and the United States on Friday. This ended an uneasy truce that existed between the two world's largest economies. While traders price in a 97% chance of a Federal Reserve rate reduction in October, and a 100% probability for December. Gold is a non-yielding investment that tends to perform well in environments with low interest rates. Bank of America analysts and Societe Generale expect gold to hit $5,000 by 2026. Standard Chartered's forecast has been raised to $4,488 on average next year. Standard Chartered Bank's global head of commodities research, Suki Cooper said: "This rally is strong, but a short-term correction will be better for a long-term trend." Spot silver increased 3.3% to $51.95, reaching a record high earlier in the session of $52.07. This was boosted by the same factors that supported gold and tightness on the spot market. Technical indicators indicate that both gold and silver are overbought. The relative strength index (RSI), which measures the relative strength of a currency, is 80 for gold. Palladium rose 5.4% to $1.482.00, while platinum gained 4.6%. (Reporting from Sherin Elizabeth Varighese and Pablo Sinha in Bengaluru, Additional reporting by Kavya Baliaraman; Editing and Joe Bavier by Alexander Smith and Joe Bavier)
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EU legislators back further reductions to the sustainability law
The European Parliament’s Legal Committee on Monday supported plans to further reduce the EU's Corporate Sustainability Law, which has been criticized by companies who say that complying with these rules would hinder European industries' competitiveness. Last year, the European Union adopted the Corporate Sustainability Due Diligence Directive (CSDDD), which requires companies to address human rights and environment issues within their supply chains or risk a fine of 5% global turnover. On Monday, the European Parliament’s Legal Committee approved proposals to limit the application of the regulations to only those companies with at least 5,000 employees and a turnover of 1.5 billion euros. CSDDD currently covers companies with at least 1,000 employees and a turnover of more than 450 millions euros. The committee also supported dropping the requirement that companies implement "transition plans" in order to align their activities with climate change goals. The EPP has always sought to simplify the rules and reduce costs for business -- even going beyond the original Commission proposal. "Our vote today will bring more predictability to our businesses in a world that is unpredictable," said Jorgen Warborn. He was the legislator who drafted and approved the text on Monday. The committee asked that the European parliament now begin negotiations with EU countries on final rules. The EU Parliament as a whole will decide whether or not to proceed with this request next week. It appears that some of the changes are already likely to be implemented. EU countries have said that they are in favor of changing the law so it only applies to companies with at least 5,000 employees. CSDDD is one of the most controversial parts of Europe's Green Agenda. Countries like the United States, Qatar and others have demanded changes, claiming that the EU has overstepped by imposing demands on foreign companies. TotalEnergies and other European companies have called on the EU to scrap the law completely, warning that it could harm the EU's economic ability to compete with foreign competitors. Investors and activists have reacted negatively to the move back on ESG regulations. They say that it undermines corporate accountability, and Europe's ability attract more investment towards climate goals. Some companies also have resisted. In an August survey conducted by the think-tank E3G with YouGov of 2,500 European company leaders, 63% said that they were in favor of large companies implementing a climate change plan. Only 11% disagreed. (Reporting and editing by Kate Abnett, Inti Lanauro)
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Mexico: Torrential rains and flooding cause at least 64 deaths, 65 missing
The government announced Monday that the torrential rains which ravaged Mexico last week left 64 dead and 65 people missing. Landslides were triggered, power was cut in some municipalities, and rivers burst through their banks. Mexican authorities have sent thousands of personnel to clean up, evacuate and monitor the areas most affected by last week's rains in Gulf Coast states and Central States. Laura Velazquez is the national coordinator for civil protection. She said that Hidalgo, along with Veracruz was the worst affected state, with 29 fatalities and 18 missing persons reported in Veracruz and 21 deaths and 44 missing persons in Hidalgo. Authorities said that electricity was cut for five municipalities in Mexico, but it has now been restored to a large extent. (Reporting Ana Isabel Martinez, writing Stefanie Eschenbacher, editing Mark Heinrich).
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LMEWEEK - Trafigura CEO minimizes AI and defence role in copper demand
The CEO of the trading house Trafigura stated on Monday that traditional applications of copper will continue as the largest part of the demand for the metal in the coming decade. This is not data centres or the defence industry. Richard Holtum, speaking at the LME Week in London, noted that artificial intelligence (AI), defence spending and metal demand are "buzzwords". He said that consumer demand will "dwarf three times" the AI demand for copper this year. Holtum, in a conversation with Matt Chamberlain, CEO of the London Metal Exchange said: "The amount that copper goes into air conditioning is more than what copper will go into data centers this year." Holtum stated that 90% of the copper demand we will see in the coming 10 years is from traditional sources such as infrastructure, construction, urbanisation and consumer goods. CRU, a consultancy, expects the copper demand in data centres to increase from 78,000 tonnes in 2020 to 260,000 tons this coming year. Holtum stated that although the new applications will add significant demand to the airwaves, "the amount that AI and defence gets in relation to the actual demand" is slightly disproportional. A spokesperson for Trafigura said that the company estimates AI copper demand to grow by 70,000 tons per year in 2025, while consumer durables, which are mainly shipped to emerging markets, will increase demand by 250,000 tons. Trafigura predicts that AI is expected to add one million tons of demand for copper over the next decade. (Reporting and additional reporting by Eric Onstad, editing by William Maclean & Tomaszjanowski).
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On the back of trade fears and rate cuts optimism, gold and silver are at all-time highs.
Gold reached a new record high on Monday as investors flocked to safe-haven investments amid renewed U.S. China trade tensions and the expectation of U.S. rate cuts. Silver's rise mirrored that of gold, reaching a new high. As of 10:04 am, spot gold had risen 1.9%, to $4,093.39 an ounce. After hitting a new record of $4,096.35/oz. U.S. Gold Futures for December Delivery surged 2.8%, to $4113.40. Prices are rising due to concern over the state of the world Gold and silver prices rise when investors become concerned about the economic or political state of the world. Jeffrey Christian, managing director of CPM Group said that the expectation of U.S. rate cuts is also driving prices up. Donald Trump, on the geopolitical side, reignited tensions between China and the United States last Friday, breaking a tense truce that existed between the two world's largest economies. The traders are now pricing in 97% of the probability that the Federal Reserve will cut rates by 25 basis points in October, and 100% for December. Gold is a non-yielding investment that tends to perform well in low interest rate environments. The price of gold has increased 56% in the past year. It reached the $4,000/oz mark for the first week last week. This was boosted by geopolitical uncertainties and economic uncertainty, as well as expectations that the U.S. will cut interest rates and the robust central bank purchases. Standard Chartered's forecast for next year is $4,488/oz, up from the average of $4,488/oz that Bank of America, Societe Generale and Bank of America have previously predicted. Standard Chartered Bank's global head of commodities research, Suki Cooper said: "Given that there has been a carousel in drivers and the short-lived dips, we believe this rally is still going strong, but a correction near-term would be better for a long-term uptrend." Spot silver increased 3.3% to $51.91/oz. It had reached a record of $52/oz in an earlier session. This was boosted by the same factors that supported gold and tightening spot markets. Goldman Sachs stated on Sunday that it expects the silver price to continue rising in the medium-term, due to private investment flows. However, they warned of increased volatility near-term. Technical indicators indicate that both gold and silver are overbought. The relative strength index (RSI), which measures the relative strength of a metal, is 80 for gold. Palladium rose 4.3%, to $1.465.97, while platinum gained 4%, to $1.651.20. (Reporting from Sherin Elizabeth Varighese and Pablo Sinha in Bengaluru, with additional reporting by Kavya Baliaraman. Editing by Joe Bavier.)
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Israel's Katz: Hamas failing to deliver four hostages dead would be a 'failure of commitments'
Israel Katz, Israel's Minister of Defence, said Monday that the announcement by Hamas militants to deliver four Israeli hostages dead is "a failure to meet commitments". Katz stated in a blog post on X that "any delay or deliberate avoidance of payment will be considered a grave violation of the contract and we will respond accordingly." According to the agreement, within 72 hours after the military redeployment all 48 hostages must be freed from the Gaza Strip. This includes 20 known alive and 28 dead. Hamas has previously stated that the recovery of bodies from some hostages could take longer because not all burial locations are known. (Reporting and editing by Menna al-Din, Jaidaa taha, and Alison Williams).
Europe's inflamed gas stocks drive costs lower: Kemp
Northwest Europe is approximately twothirds of the way through the heating season, with a record volume of gas in storage for the time of year, which is putting downward pressure on gas costs.
Gas inventories throughout the European Union and the United Kingdom stood at 771 terawatt-hours (TWh) on Feb. 10, according to data compiled by Gas Facilities Europe (GIE).
Stocks were 238 TWh (+45% or +1.95 standard deviations). above the prior 10-year seasonal average and the surplus had. swelled from 167 TWh (+18% or +1.70 basic discrepancies) at the. start of October.
As an outcome, storage centers were still 67% full compared. with a ten-year seasonal average of 49% ( Aggregated gas storage. stock, GIE, Feb. 13).
Futures costs have currently fallen dramatically, particularly for. neighboring months, to encourage more intake before winter season ends. and flush out a few of the excess stocks.
MILD WINTER SEASON
At Frankfurt in Germany, two-thirds of the heating degree. days each winter take place on average on or before Feb. 10.
With the heating season entering its final third, it is very. most likely stocks will end the deficiency season at or near to a. record high.
Based on the behaviour of stocks over the last 10. years, stocks are on course to end winter season 2023/24 at 628 TWh,. which would be the second greatest on record after 629 TWh at the. end of winter season 2022/23.
The forecasted carryout has increased from 554 TWh on Oct. 1,. as an outcome of warmer than average temperatures and the. continued effect of high rates reducing usage by. market and families.
Temperatures at Frankfurt were above the long-lasting average. on 94 out of 133 days between Oct. 1 and Feb. 10.
Temperatures have actually been above average monthly up until now this. winter however particularly in October (2.5 Celsius) higher than. normal) and December (+2.8 C).
The total number of heating degree days because the start of. the heating year has been 21% lower than usual at 1,133 compared. with a long-lasting average of 1,441.
Chartbook: Europe gas stocks and rates
Offshore winds were more powerful than the seasonal average in. both December and January, boosting electricity production from. wind farms.
The windy and mainly mild weather condition has cut direct gas. consumption by homes and in other buildings in addition to by. power generators.
At the exact same time, industrial intake has actually been suppressed by. a combination of plant shutdowns triggered by high fuel rates and. a slump in business cycle.
Germany's energy-intensive markets (consisting of iron and. steel, ceramics, glass, fertilisers and chemicals) reported. production was down by more than 22% in December 2023 compared. with the exact same month 2 years earlier.
The European Union's seven biggest gas-consuming nations. ( Germany, Italy, France, Netherlands, Spain, Belgium and Poland). reported below-average usage monthly in 2023.
For the year as an entire, total consumption in the seven. major consuming nations was down by 7% compared with 2022 and. 19% compared to 2021.
EXCESS STOCKS
Storage websites across the European Union and UK. are on track to be almost 55% full at the end of winter 2023/24. ( with a maximum likely variety from 44% to 61%).
Temperatures are predicted to remain above normal throughout the. European Union and UK through completion of February. according to the European Centre for Medium Variety Weather. Projections.
The seasonal gas storage surplus is likely to continue. swelling with storage likely to complete the winter season almost. 60% full.
With a lot gas rollovered there will not be much less. storage space than usual to absorb more during the summer season refill. season in 2024.
COST SLIDE
Prices for gas to be provided in March 2024 have actually fallen to. an average of 30 euros ($ 32.15) per megawatt-hour so far in. February from 52 euros in October.
Rates for March 2024 (the last complete winter month) are. trading below prices for April 2024 (the first spring month) to. encourage more usage and purge some excess stocks.
As an outcome, the end-of-winter calendar spread from March to. April 2024 remains in a typical contango of 0.22 euro cents so far. in February below an average backwardation of 1.44 euros in. October.
Front-month rates of 28 euros in February are in the 55th. percentile for all months given that the start of the century, as soon as. changed for inflation.
Real front-month futures prices have actually pulled back from 47 euros. ( 88th percentile) in October 2023 and a record 251 euros in. August 2022.
Most energy-intensive industrial consumers purchase gas on the. forward market however here too costs have actually pulled back to motivate. more use.
The calendar strip for the year-ahead (in this circumstances. purchases over the course of 2025) has actually averaged 33 euros up until now. in 2024 down from 52 euros in 2023 and 121 euros in 2022.
After changing for inflation, year-ahead costs are simply 5. euros (21%) above the average for the ten years before Russia's. invasion of Ukraine in 2022.
Area and forward rates are most likely to remain under downward. pressure till the storage surplus stabilises and leaves enough. space to soak up excess seasonal gas production over the summer season of. 2024.
Related columns:
- Brazil's hydro power contributes to worldwide gas surplus (February. 9, 2024)
- Europe's gas cost falls to motivate more industrial usage. ( January 4, 2024)
- Record warmth leaves world with too much gas (December 15,. 2023)
- Europe's energy crisis is over (November 28, 2023)
John Kemp is a market expert. The views revealed. are his own. Follow his commentary on X https://twitter.com/JKempEnergy.
(source: Reuters)