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As markets wait for US data, gold and silver prices ease from record highs.
The gold price remained stable on Wednesday, as traders awaited U.S. Economic indicators to gauge Federal Reserve policy direction. Silver prices also declined from their record highs. After losing over 1% the previous session, spot gold dropped 0.1% at 1128 GMT to $4203.58 per ounce. U.S. Gold Futures for February Delivery were up 0.3% to $4,234.60. Ole Hansen is the head of commodity strategy for Saxo Bank. He said, "Pay attention to key U.S. statistics that could cement expectations about a rate cut in December which would be supportive of metals." Investors await the U.S. ADP November employment figures at 13:30 GMT, and Friday's delayed Personal Consumption Expenditures data for September. Brokerages are projecting a policy easing as a result of weaker U.S. data and dovish Fed signals. CME's FedWatch shows that there is now an 87% probability of a rate reduction next week. Gold that does not yield a return tends to do well when interest rates fall. Silver fell 0.5%, to $58.15 per ounce. It had previously reached a record-high of $58.94. Hansen said that silver is supported by tight supply, momentum buying, and short-covering following last Friday's breakout above $54.50. He added that overbought condition posed a risk to bulls in the near term. Silver, a precious metal and an industrial metal, has risen by 101% in the past year. Its inclusion on a U.S. critical mineral list is also a factor. This year, gold has gained 60%. Palladium fell 0.5%, while platinum rose 0.6%, to $1.647.75 per ounce. Reporting by Pablo Sinha, Bengaluru Editing Mark Potter and David Goodman
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Copper reaches record highs on concerns about supply and a weaker dollar
The copper price reached a new record on Wednesday, thanks to the weaker dollar and concerns about supply. Benchmark LME 3-month copper rose 1.7% to $11,333 per metric tonne by 1102 GMT, after reaching a record high at $11,434.50. Copper is looking bullish, after hitting new highs. Algorithmic models are flashing buy signals. Dan Smith, managing Director of Commodity Market Analytics, said that there's a good chance the price could rise to $12,000 per ton. Data showed that business activity in Europe expanded at the fastest rate in over two years in November, adding to the bullish mood. LME data on Tuesday showed that there were net cancellations of 50 725 tons of copper in Asian warehouses. This brought the LME's available or on-warrant copper stock to its lowest level since July, at 105 275 tons. Smith said that despite the Comex premium to the LME benchmark, there is still a strong interest to export copper to the U.S. Comex copper prices are rising due to the premium of Comex over LME. That is already a record. The LME cash premium over the 3-month contract reached $69 per ton on February 2, its highest level since mid-October. This indicates some tightness of supply in the near term. The expectation of a rate cut from the U.S. Federal Reserve in the coming week, as well as the weaker dollar, also helped to support the rise in base metals. Dollar-priced materials are more appealing to buyers who use other currencies due to the weaker dollar. Low interest rates improve the prospects of metals that are dependent on growth. Other LME metals include aluminium, which rose by 0.5% to 2,880 dollars a ton. Zinc was up by 0.2% at $3,066, while lead gained 0.5%, reaching $2,005. Tin climbed 1%, to $39 505, and nickel grew 0.7%, to $14 895. (Reporting and editing by David Goodman.)
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Fortescue collaborates with Chinese steelmaker to develop green iron technology
Fortescue, an Australian company, announced on Wednesday it would work with China Baowu's subsidiary, the largest steelmaker in the world, to investigate new green technologies for accelerating the decarbonisation of the steel industry. Fortescue, which is the fourth largest iron ore supplier in the world, signed a contract with China's Taiyuan Iron and Steel Group in November for a pilot project on plasma-enhanced hydrogen-based iron and steel metallurgical technologies, according to a company statement posted on WeChat. The project will develop a technology to eliminate the pre-treatment of raw materials, such as iron ore pelletizing, coking and sintering. These processes are typically major contributors to carbon dioxide emissions during steelmaking. The collaboration involves the design, construction and operation of an industrial test line that can produce 5,000 tons of hot iron, a product from a blast-furnace. Agustin Pichot, Fortescue’s Chief Executive Officer for Growth and Energy, said: "We are exploring technology for green-smelting using Fortescue’s Pilbara Iron Ore." The decarbonisation of steel will increase the demand for high-grade iron ore. This is a challenge for Australian miner, who mainly supply low to medium grade iron ore. Fortescue said it would provide the capital for this project. Fortescue and another subsidiary of China Baowu partnered earlier this year to develop green iron technology. (Reporting and editing by Amy Lv, Lewis Jackson)
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India's JSW Steel will move Bhushan Power Steel's business to a JV with JFE Steel
India's JSW Steel is selling the steel business from its Bhushan Power and Steel unit to a joint venture of equal stakes with Japan's JFE Steel, for 244.83 Billion Rupees ($2.72 Billion), in order to fund its growth. After the announcement made on Wednesday, shares of JSW Steel, India's largest steelmaker in terms of market capitalization, fell. The shares closed 1.6% down, making them among the biggest percentage losers in the Nifty Metal Index. In September, India's top court approved JSW's acquisition of Bhushan Power and Steel. This decision capped months of legal battles that saw the court reverse its earlier decision to reject this deal. JSW Steel announced that JFE Steel would invest 157.50 billion rupies in the JV. JFE Steel stated in a separate press release that the JV aims to increase crude steel production to 10 million tonnes at integrated steelworks by 2030. The two steelmakers have pledged to invest in a separate joint venture to increase production of grain-oriented electric steel. Analysts claim that the increase in steel demand has been attributed to increased manufacturing and infrastructure spending in India. Reporting by Anuran Sahu, Manvi Pan and Hritam Mukerjee from Bengaluru. Editing by Mrigank Dahniwala
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Fuel and funds to aid flood-hit Indonesian areas are running low
The authorities battling the floods that hit Sumatra, an island in Indonesia, this week and killed around 800 people have asked for additional central government assistance to address shortages of food, fuel and funds. According to updated government figures, 463 people are missing in West Sumatra (North Sumatra), Aceh and West Sumatra. Local officials say that the lack of power and roads is preventing aid from reaching those who need it. Iskandar Al-Farlaky, the chief of East Aceh, stated that fuel had been limited in East Aceh for days and that aid was delivered by boat. Some people who lived in isolated districts faced the threat of starvation. He said that food stocks were dwindling in three districts and that hunger was imminent. He asked the central government to declare a national state of emergency. "The regional budget has a limited amount." DWINDLING FUEL AND RICE SUPPLIES According to national data, 135,000 people were affected in East Aceh by the disaster. Haili Yogi, the chief of Central Aceh where 21 people were killed by floods and 54,000 were affected, reported that fuel and rice supplies were running low. He is one of four regional leaders who are urging the government to declare an emergency in the face growing public anger. In Indonesia, 3.1 million people have been affected by the flooding, and 592,600 people were evacuated. Prasetyo hadi, the presidential spokesperson, said that Indonesia's disaster relief budget of 500 billion Rupiah (30 million dollars) was adequate. He added that this figure could be raised if needed. These comments follow remarks made by the President Prabowo Subianto to reporters last week, in response to a question about declaring an emergency national, that things were improving and existing arrangements were sufficient. People turn to muddies when they don't have access to fresh water Sibral Malasi, the chief of Aceh's Pidie Jaya Region, also said that fuel supplies in this region were limited. KompasTV reported that residents of Aceh Tamiang, due to a lack of freshwater, were drinking and cleaning muddy floodwater. Jonathan Victor Rembeth is an official with the disaster mitigation agency. He said that a national disaster could be declared if provincial governments declare their inability of responding to a catastrophe, which they haven't done yet. Indonesia, which is frequently hit by natural catastrophes, declared a state of emergency in response to the COVID-19 epidemic. The law allows the president to declare an emergency national, releasing additional funds for aid and rescue. Indonesians have criticised the central Government for not declaring a state of emergency. They also cited budget cuts for the agency that deals with disaster mitigation, which according to official data was down by 50% from last year. Tito Karnavian said that Indonesia's Minister of Home Affairs, Tito Karnavian had asked regional governments to donate funds not used by flood victims to those who were affected. Muhammad Baron, a spokesperson for Pertamina, said that the company faces fuel distribution problems in "nearly" all of the flood-affected regions. The company is looking for alternative routes but it will take some time to deliver. Green groups blame illegal logging and deforestation for the worsening of the disaster. $1 = 16,625,0000 rupiah (Reporting and editing by Clarence Fernandez, Alex Richardson, and Stanley Widianto)
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Silver eases off record highs as gold remains steady, while markets are focused on US data
The gold price remained stable on Wednesday, as traders waited for key U.S. indicators to gauge Federal Reserve policy. Silver prices also declined from their new record high. At 0856 GMT the spot gold price was unchanged at $4,207.60 an ounce, after dropping more than 1% during the previous session. U.S. Gold Futures for December Delivery were up 0.4% to $4,237.90 an ounce. Ole Hansen is the head of commodity strategy for Saxo Bank. He said, "(Gold's) price remains unchanged in early European morning hours as attention turns to key U.S. economic data that may cement expectations of a metal-supportive rate cut in December." Investors will be watching for the U.S. ADP November employment figures, which are due at 1315 GMT. The September Personal Consumption Expenditures Index (PCE), delayed due to the U.S. Government Shutdown, is due on Friday. The Fed's dovish tone and weaker economic data in the United States have increased expectations for a rate reduction at its meeting on December 9-10. Brokerages, such as BofA and J.P. Morgan are projecting a policy easing. According to CME's FedWatch, U.S. rate-futures now indicate an 87% probability of a rate reduction next week. Gold that does not yield tends to do well in an environment of low interest rates. Silver fell 0.5%, to $58.15/oz. It had earlier reached a new record of $58.94. Hansen stated that silver is supported by "a limited supply outlook, momentum buying, and short-covering following Friday's breakout over $54.50." He added that overbought condition posed a risk to bulls in the near term. Silver, a precious metal and an industrial metal, gained 101% in value this year. Its inclusion on a U.S. critical mineral list has also helped. This year, gold has risen 60%. Global shares were also more stable on Wednesday thanks to a Wall Street rebound overnight, as the brief sell-offs in bond markets, cryptocurrencies, and cryptocurrency markets subsided. Palladium, on the other hand, lost 0.5% and rose to $1.455.34, while platinum increased by 0.6%. Reporting by Pablo Sinha from Bengaluru. Mark Potter (Editing)
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Fuel and funds to aid flood-hit Indonesian areas are running low
The authorities battling the floods that hit Indonesia's Sumatra island this week, which killed 804 people, have asked for more help from the central government to address shortages in funds, fuel and food. Local government officials say that landslides and floods caused by cyclones have led to 634 deaths in the three provinces West Sumatra (North Sumatra), Aceh and West Sumatra. They also claim that power lines and roads were cut, preventing aid from reaching those who needed it. Teuku Raja Keumangan told Kompas TV that "people are getting sick" in Aceh where flooding has affected 25,000 people. Haili Yogi, the chief of central Aceh where 21 people died and 54,000 were affected by floods, has said that fuel and rice supplies are running out. He urged the central government declare a state of emergency, as anger amongst citizens grows at being cut off from assistance. The budget of Indonesia, which is 500 billion rupiah (30 million dollars) for disaster relief, is adequate, according to presidential spokesperson Prasetyo Didi on Wednesday. However, he added that this figure could be raised if needed. These comments follow remarks made by the President Prabowo Subianto to reporters earlier this week, in response to a question about declaring an emergency national, that things were improving and existing arrangements would suffice. People turn to muddies when they don't have access to fresh water Sibral Malasi, the chief of Aceh's Pidie Jaya Region, has also said that fuel supplies are limited. KompasTV reported that residents of Aceh Tamiang were cleaning and drinking flood water due to a lack of freshwater. Jonathan Victor Rembeth said that a national disaster could be declared if the provincial governments declare their inability of responding to a catastrophe, which they haven't done yet. Indonesia has declared a COVID-19 national emergency. The floods in the country have affected over 3.3 million people, and 576,000 of them were evacuated. The law allows the president to declare an emergency national, releasing additional funds for aid and rescue. Indonesians have criticised the central Government for not declaring a state of emergency. They also cited the cuts in the budget allocated to the agency for disaster mitigation, which according to official data was 50% lower this year than the previous. Indonesia's Minister of Home Affairs, Tito Karnavian said that he asked regional governments not affected by floods to donate any unused funds they had to those who were affected. Tito said on Wednesday that the central government will support local authorities who have "given up on" flood response efforts. Muhammad Baron, a spokesperson for Pertamina, said that the company faces fuel distribution problems in "nearly" all of the flood-affected regions. The company will be looking for alternative routes but it may take some time to deliver. Green groups blame illegal logging and deforestation for the worsening of the disaster. $1 = 16,625.0000 Indonesian rupiah (Reporting and editing by Clarence Fernandez, Stanley Widianto, Gayatri Sulaiman, Fransiska Naangoy, Stefanno Sulaiman, Dewikurniawati, Hidayatullah, Pidie Jaya)
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Stocks of the Russian rouble fall as US-Russian talks fail to yield a breakthrough on Ukraine
The Russian rouble fell and the stocks in Russia dropped on Wednesday, after late-night talks at the Kremlin between President Vladimir Putin and Donald Trump's top representatives failed to produce a breakthrough regarding a solution to end Ukraine's war. The talks between Putin, Steve Witkoff (Trump's special representative) and Jared Kushner, Trump's son-in law, went well past midnight. Yuri Ushakov said that "compromises had not been reached" after the talks. The rouble fell 0.6% against the dollar at 0820 GMT and was down 0.5% against the Chinese Yuan at 11,01 on the Moscow Exchange where it is most traded. The main index of the Moscow Exchange was down by 1.6%, with Gazprom down 2%, Sberbank down 1.5% and Rosneft down 1,7%. Analysts at Alfa Bank said that the flagship stock market indicator has been declining due to the fact that there have not been any progress in Ukraine negotiations and reports of a lack of compromise. Analysts consider the Russian stock exchange, which has most of its blue-chip companies under Western sanctions as being undervalued. They call the main beneficiaries of the Ukraine peace talks, "peace coin". In February, the U.S. and Russia talks began. This initially lifted the thin Russian market driven by domestic funds after Western funds had left Russia. However, since then, hopes of a rapid end to the conflict have slowly faded. There is less hope. Fewer illusions. How much does hope cost? It's not so small. Yevgeny KOGAN, an economist, said that the market could lose between 8-10% as a result of the general disappointment. (Reporting and editing by Guy Faulconbridge/Andrew Osborn; Gleb Bryanski, Gleb)
SNB to maintain negative rates despite inflation decline
Economists on Wednesday said that the Swiss National Bank would not opt for negative interest rates next week or until 2026, despite the fact that inflation was below expectations and at the lower end of its target range.
Official data revealed that the annual inflation rate in Switzerland unexpectedly fell by a tenth of a percent point to zero in November, slightly below expectations.
A poll of analysts found that the consensus was that last month's inflation rate would be unchanged, at 0.1%.
The SNB has set a price stability target of 0% to 2% for inflation. This 0% figure is the lowest since May.
DATA IS THE LAST READING OF INFLATION BEFORE RATES ARE DETERMINED
The central bank refused to comment on these figures, the last inflation data before it announces the next interest rate decision at its December 11th meeting.
Even with the economic downturn, economists believe the SNB will maintain its benchmark rate at 0% until 2026. Karsten Junius is an economist with J.Safra Sarasin and he also believes that there will be no policy change in 2026.
Rudolf Minsch is the chief economist of economiesuisse and he also predicts that central bank will keep interest rates zero for the next week, as well as throughout 2026. Swiss inflation should increase to 0.4% in next year.
He said that negative interest rates have unwanted effects and are used only when an urgent need is present, which we do not see.
SNB HAS A HIGH THRESHOLD FOR CUTTING RATES
Alessandro Bee, an economist at UBS, said that he expects the SNB to maintain rates at 0% until 2026. He also predicted a slight increase in Swiss inflation next year due to increased wages.
The market expects that the bank's benchmark rate will remain unchanged next week.
Officials of the SNB have previously stated that they expect inflation will rise in the future. They also said that they would tolerate an inflation rate below 0% for a temporary period. (Writing and editing by John Revill, Dave Graham, Aidan Lewis, Miranda Murray)
(source: Reuters)