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Gold as a safe-haven reaches record highs above $4,100/oz due to Fed rate cuts and trade worries
The gold price surpassed the $4,100 mark on Tuesday. This was boosted by the expectation of a rate reduction this month by the U.S. Federal Reserve, and by investors fleeing to safety following a resurgence in trade tensions with Beijing. As of 12:46 pm, spot gold was up 0.8% at $4,143.17 an ounce. After hitting a high of $4179.48 in the earlier session, spot gold rose 0.8% to $4143.17 per ounce as of 12:46 p.m. U.S. Gold Futures for December Delivery gained 0.7% to $4.160.20. Metal prices have risen 57% in the past year. On Monday, they broke the $4,100 barrier. The rally was driven by a number of factors including geopolitical uncertainty, the expectation of U.S. rate cuts, central bank purchases and strong ETF inflows. Bank of America analysts and Societe Generale see gold at $5,000/oz by 2026. The uptick in U.S. - China trade tensions, ongoing government shutdown and expectations of more Fed easing all support gold, said Peter Grant. Grant said that U.S. president Donald Trump's threat to impose 100% duties on Chinese products, the roll-out of tit for tat port charges by both of the world's largest economies, and a macro-trend of de-dollarization, could push gold up to $5,000/oz in mid-next-year. Treasury Secretary Scott Bessent announced on Monday that Trump will meet Chinese leader Xi Jinping later this month in South Korea. Gold that does not yield tends to perform well in low interest rate environments. The markets are expecting a 25 basis-point cut in the Fed's rates this month. This will be followed by another reduction of 25 basis points in December. Fed Chair Jerome Powell stated that "based on the data we have, it's fair to say the outlook for inflation and employment has not changed much since the September meeting four week ago." Silver spot, buoyed up by the same factors that drive gold and tightness on the spot market, reached a record $53.60/oz, before reversing 1.4%, to $51.63. Palladium rose by 3.5%, to 1,523.73, while platinum rose 0.2%, to $1649.50. (Reporting and editing by Anil D’Silva and Sahal Muhammed in Bengaluru, and Noel John and Pablo Sinha, both of Bengaluru)
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Petrobras faces new environmental queries on Foz do Amazonas drilling license
According to documents seen on Tuesday, Brazil's Ibama environmental agency has requested more information from the state-run Petrobras in order to complete the licensing process of drilling in the Foz do Amazonas Basin. A new technical report highlighted "pending issues and uncertainty" in Petrobras emergency and wildlife protection plan. Ibama approved the emergency response test performed by Petrobras back in August but requested adjustments before making a decision on the license. Petrobras issued a statement in which it said that it would "respond to all inquiries from the agency, as it had done since the start of the process, and fully comply with the requirements of environmental licensing procedures." The company said that it has scheduled several technical meetings this week, and is confident that the license will be granted soon. Magda Chambriard, Petrobras' CEO, said that she was surprised at Ibama’s request for more information. She reaffirmed, however, her support for the expansion of oil exploration. Chambriard anticipates that the license will be granted on October 16 and warns that Petrobras may need to purchase a new drilling ship if it is not approved by Oct. 22. Petrobras reported last week that it had incurred standby costs of 180 million reais (32.84 millions) for the drillship whilst awaiting the licence. Since years, the company has sought approval to drill in a region that is believed to have significant reserves. However, it faces opposition due to environmental and social concerns. The oil workers' union (FUP), on Monday, said Petrobras had spent more than 1 billion reais since 2022 on environmental licensing, including 543 millions on rig rentals, 327 millions on vessels, and 142 million on air services.
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Shares soar as Titan Mining produces graphite in New York
Titan Mining announced on Tuesday that it will begin producing graphite at its Empire State Mines, located in New York. This comes days after China increased export limits for rare earth minerals. Shares of Titan Mining soared 26.8% during afternoon trading. Titan has announced plans to increase production to 40,000 tonnes annually, which could provide about half the current U.S. demand for natural graphite. Titan's CEO Rita Adiani stated that "China's decision on graphite exports highlights the importance of a reliable domestic supply." She added that Titan would benefit from the move away from China. Graphite is essential for the production of electric vehicles, wind turbines, and power grids. China is the world's largest graphite refiner, with more than 90% of its material being refined in China. Beijing, which had already limited rare earth exports to five minerals, added another five to its list of controlled minerals last week. This brings the total to 12 minerals. The Trump administration is stepping up its efforts to reduce the U.S.'s reliance on China as a source of key materials. Some federal grants have been converted into equity stakes in order to strengthen domestic supply chain for semiconductors and minerals. Titan announced that its New York plant will produce high-purity natural flake graphite, micronized from the Kilbourne deposit. (Reporting and editing by Katha Kaalia in Bengaluru.
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Brazil's Petrobras wants a mandate for coprocessed Diesel, says CEO
Magda Chabriard, the CEO of Brazil's Petrobras, said that the company wants the government to require the use coprocessed diesel with vegetable oil. The firm is capable of producing fuels with up to 10% renewable contents. The coprocessed diesel is not included in the recently passed alw which created incentives to decarbonize fuels, including a mandate for a so-called separate green diesel. Chambriard, at an event held in Rio de Janeiro, said that "our coprocessed Diesel still does not have a mandate." Petrobras has taken steps to reduce emissions by using coprocessed diesel. The CEO stressed the importance of collaboration between the oil and agribusiness sectors to reduce emissions. He added that Petrobras is looking to source vegetable oils from agribusiness in order to produce coprocessed Diesel. She said, "We will do this without conflicting with Brazilian agribusiness." Chambriard reaffirmed her support for expanding the oil exploration process to add more reserves. This was in response to a new request by the Brazilian environmental agency Ibama, which requested information on the environmental licensing processes for drilling within the Foz do Amazonas Basin. (Reporting and writing by Rodrigo Viga Gaier, Isabel Teles, and Brendan O'Boyle).
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US stocks fall with European shares, while gold prices rise as trade tensions intensify
Wall Street stocks plunged on Tuesday as renewed trade tensions between Washington, Beijing and a prolonged U.S. Government shutdown dampened investor risk appetite. In early trading, all three major U.S. indexes were in negative territory. The tech-heavy Nasdaq was the most affected by megacap stocks. Crude oil prices dropped and gold prices, a safe haven, jumped above $4100. The International Monetary Fund report, which raised its outlook for global growth as the impact of tariffs and the financial environment has been more benign than anticipated, did not cause as much damage to the market. However it warned that a trade war between two of the largest economies in the world could have a significant effect on output. Oliver Pursche is the senior vice president of Wealthspire Advisors in New York. "We saw some pretty good selling on Friday, and that reminded me that there are still trade disputes and instability in the world. When you combine that with the lack of data released due to the government shutdown, there is a general feeling of unease." On Tuesday, the United States and China started charging port fees tit for tat. Trade wars between China and the United States have roiled the world markets in 2018. The tensions reached boiling point late last week, after China announced stricter controls on its rare earth exports. U.S. president Donald Trump responded by threatening to raise tariffs on Chinese products into triple digits. The unofficial start of the third quarter earnings season was marked by mostly positive quarterly results from high-profile financial companies including JPMorgan Chase. Goldman Sachs. Citigroup. and Wells Fargo. Official economic data are unavailable as the government shutdown continues due to a partisan impasse in Congress. A report by the National Association of Independent Business revealed that small business sentiment was deteriorating, as inflation concerns returned to the forefront. The Dow Jones Industrial Average dropped 59.24, or 0.12%, to 46,008.34. The S&P 500 declined 34.74, or 0.52% to 6,619.98. And the Nasdaq Composite lost 229.87, or 1.1%, to 22,464.74. The European stock market fell to its lowest level since more than two decades as the renewed U.S. China trade tensions sourred investor sentiment. Also, French tire manufacturer Michelin cut their annual forecasts. The MSCI index of global stocks fell by 5.17 points or 0.53% to 975.92. The pan-European STOXX 600 fell by 0.35% while Europe's FTSEurofirst 300 fell by 7.25 points or 0.32%. Emerging market stocks dropped 13.50 points or 1.00% to 1,339.81. MSCI's broadest Asia-Pacific share index outside Japan fell by 1.08% to 694.99. Japan's Nikkei dropped 1,241.48 or 2.58% to 46,847.32. Treasury yields fell but were still off their lows after concerns over trade tensions subsided following the IMF's uplift of its growth forecast. The yield on the benchmark U.S. 10 year notes dropped 0.7 basis points from 4,051% at late Friday to 4.044%. The 30-year bond rate rose by 0.6 basis points from Friday's 4.634% to 4.6397%. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve (Federal Reserve), fell by 2.1 basis point to 3.502% from 3.522% at late Friday. The oil prices dropped on the back of trade war fears and a report by the International Energy Agency that raised the prospect for increased supplies while dampening the demand. U.S. crude dropped 1.92%, to $58.35 per barrel. Brent was down to $62.04 a barrel on the same day. As trade-driven risks increased, safe-haven currencies like the Swiss Franc and Japanese Yen benefited. The dollar index (which measures the greenback in relation to a basket of currencies, including the yen, the euro and others) fell by 0.11%, while the euro rose by 0.18%, reaching $1.1589. The dollar fell 0.2% against the Japanese yen to 151.97. Bitcoin fell by 3.45%, to $111 804.60. Ethereum fell 7.14% to $4,983.21. Gold has surpassed $4,100 on the back of rising expectations for rate cuts by the U.S. Federal Reserve, and the demand for safe havens resulting from the latest salvos in the Washington-Beijing Trade Spat. Spot gold increased by 0.47%, to $4129.56 per ounce. U.S. Gold Futures rose by 0.32% to $4121.80 per ounce.
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Italian lobby: China's restrictions on rare earths threaten Europe's automotive industry
The expected new Chinese restrictions on rare earth metals exports may have a significant effect on the European automotive industry, according to the Italian auto parts maker lobby ANFIA, who said Tuesday that reserves of these materials are low. China, despite an agreement signed in July to expedite shipments into Europe, has tightened its control on rare earth exports. Last week it announced new restrictions. The country refines the majority of rare earths in the world, which are vital for industries such as semiconductors, automotive manufacturing, and defence. ANFIA chairman Roberto Vavassori stated that manufacturers were able to maintain their production even when China cut supplies in the previous months. However, reserves of rare-earth metals are now depleted. Vavassori, speaking at the ForumAutoMotive Conference in Milan, said that "the buffer for reserves is no longer there". Rare earths are used in the automotive industry for electric motors, and other vehicle components. Vavassori stated that the rare earth industry is small and worth less than $5 billion worldwide, but it can still slow down the global auto industry. (Reporting and editing by Barbara Lewis; reporting by Giulio P.)
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EU Presses US to Drop Tariffs on Metals Content
Maros SEFCIOVIC, EU Trade Commissioner, said that the European Commission wants the United States' tariffs removed on steel products as Brussels tries to push parts of the EU/U.S. Tariff Agreement into force. The two transatlantic partners have agreed to consider limiting their overcapacity of steel, aluminum and derivatives made from these metals. Tariffs of 50% in the U.S. could be replaced with tariff-free or low tariff quotas. The Commission, the body that oversees the EU's 27 member states trade policy, thinks it has met its end of the bargain by proposing to raise its steel tariffs to 50%, reduce current quotas, and make clearer where the steel comes from. Sefcovic stated that the proposal, which needs to be approved by the EU governments and European Parliament, has "very similar" contours as the U.S. approach to protect domestic steel industries from overcapacity. He said at a press conference held in Denmark after the EU Trade Ministers' meeting that once we protect our markets, we can discuss steel derivatives. I believe we should end the practice of having to calculate the amount of steel in the dishwasher or fridge. He said he proposed this in an email to his U.S. colleagues. Tariffs on steel and aluminum are not limited to the metals themselves. They also apply to a wide range of products that are derived from these metals. The U.S. has added 407 new product categories to their list of derivatives in August. Steel and aluminum content are subject to a tariff of 50%, while the EU is charged a universal rate for non-metal contents. There are many product categories, including wind turbines. Reporting by Philip Blenkinsop, Editing by Mark Potter
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Bowman anticipates two additional interest rate reductions this year
Federal Reserve Governor Michelle Bowman said on Tuesday that she still expects the U.S. Central bank to deliver rate cuts at its two final policy meetings in 2025. Bowman told an audience in Washington that he still expects two more rate cuts by the end of the year. Last month, the Fed cut its benchmark rate by a quarter percentage point. This was its first decrease in borrowing costs since December. The Fed's recent policy announcement showed that a small majority of policymakers believe more rate cuts are appropriate this year in light of the softening of the job market. The next meeting of the U.S. Central Bank will be held on October 28-29. Its final session for the year is scheduled for the second half of December. Rate futures markets positioning reflects expectations for quarter-percentage-point reductions at both meetings. Bowman stated, "I believe that as long as the labor market and the other economic data continue to evolve in the manner I expect them to, we will be on the path of lowering the Federal Funds Rate." Bowman supported the rate cut last month after dissension at the July meeting. In this dissent, she was joined by Fed Governor Christopher Waller who, like Bowman was appointed to the U.S. Central Bank's Board of Governors during President Donald Trump's first term as White House. Bowman and Waller both believe that Trump's tariffs, which he has implemented since regaining power, will not result in persistent inflation. They also say the risks are shifted to the job market.
Sources say ADNOC will win Covestro $17 billion deal with remedies tweaks.
Sources with direct knowledge said that the EU is likely to approve ADNOC's 14.7 billion euro ($17 billion) offer for German chemicals firm Covestro. EU regulators are expected to tweak remedies offered earlier in the month.
The European Commission is investigating the deal - ADNOC’s largest acquisition to date and one of the biggest foreign takeovers by a Gulf State of a EU company - over concerns that ADNOC could be using state subsidies for the acquisition of the chemicals company.
Last week, the EU regulator asked for feedback from competitors and third parties after ADNOC offered a change to its articles of Association to address EU concerns regarding the unlimited state guarantees.
The company also committed to retaining Covestro's Intellectual Property in Europe. Sources said that the Commission will likely demand minor changes in the remedies before approving the deal. These types of demands are common after third-party feedback.
The Commission declined comment.
ADNOC reiterated its previous comments that it would offer a package robust and proportionate of remedies to the Commission, and was confident that this would result in the timely clearance of the transaction.
Separately the Commission will resume its investigation into the deal after temporarily stopping the process last week while ADNOC provided requested information.
ADNOC responded to all requests for information since then, according to another source. Reporting by FooYun Chee. (Editing by Barbara Lewis, Mark Potter and Foo Yun Chee)
(source: Reuters)