2024-09-05 05:35

Gold is up 22% so far in 2024 Heading for the biggest annual growth since 2020 Global gold ETFs saw 4th month of inflows in August, says WGC Julius Baer keeps 3-month target for gold at $2,500/oz LONDON, Sept 5 (Reuters) - Gold rose on Thursday, fuelled by wide expectations of a deeper U.S. Federal Reserve rate-cutting cycle starting this month. Spot gold was up 1.0% at $2,518.92 per ounce by 1221 GMT. The bullion hit a record high of $2,531.60 on Aug. 20. Gold is supported by a global economic slowdown that has "lifted the prospect for a more aggressive rate-cutting cycle," said Ole Hansen, head of commodity strategy at Saxo Bank. Investors raised bets on larger-than-previously-expected Fed September rate cut after data showed on Wednesday that U.S. job openings dropped to a 3-1/2-year low in July, suggesting the labour market was losing steam. The widely expected cut has prompted physically backed gold exchange-traded funds (ETFs) to resume purchases over the last four months. This comes after three years of outflows when Western safe-haven seekers chose the U.S. Treasury bond market, where yields were high instead of non-yielding gold. "Now the big question is of course how low the rates are going to go, or how low the yields will go," said Carsten Menke, an analyst at Julius Baer. "If the Fed cuts the rates, the interest rates will still remain in the restrictive territory - above the neutral rate, and based on that, we don't think that this is going to cause a big wave of buying by Western gold investors." The precious metal is up 22% so far this year, heading for the biggest annual growth since 2020, amid bets on upcoming U.S. rate cuts, safe-haven demand driven by geopolitical and economic uncertainty, and robust purchases by central banks. Julius Baer keeps its three- and twelve-month price targets for gold unchanged at $2,500 and $2,600 per ounce, respectively, as it expects the physical demand from the emerging markets to recover. "This includes Chinese investment demand, which has taken a bit of a pause during summer. With the overall economic backdrop, gold is the only remaining asset which has some sort of appeal to the Chinese investor, so this demand should come back to the market sooner or later," Menke said. Spot silver gained 1.6% to $28.74, platinum climbed 3.1% to $930.40 and palladium rose 1.3% to $946.50. Sign up here. https://www.reuters.com/markets/commodities/gold-lacks-momentum-investors-cautious-ahead-us-jobs-data-2024-09-05/

2024-09-05 05:34

Sept 5 (Reuters) - South Africa's Harmony Gold (HARJ.J) , opens new tab increased its dividend on Thursday as its annual profit more than doubled from the prior year, boosted by higher gold production, better grades and record prices. Harmony's headline earnings per share - a profit measure - jumped to 18.52 rand ($1.04) in the year ended June 30, up from 8 rand in the previous year. The top gold producer in South Africa by volume declared a final dividend of 0.94 rand per share, up from 0.75 rand. Harmony's gold production rose 6% to 1.56 million ounces, surpassing its target of 1.55 million ounces. Its average gold price increased 16% as bullion prices surged to record highs. Higher gold prices and a 6% improvement in underground recovered grades drove Harmony's operating free cash flows to a record 12.7 billion rand ($710.51 million). ($1 = 17.8740 rand) Sign up here. https://www.reuters.com/markets/commodities/safricas-harmony-gold-boosts-dividend-after-profit-jumps-132-2024-09-05/

2024-09-05 05:34

BEIJING, Sept 5 (Reuters) - African countries' inadequate access to debt relief and scarce resources is a recipe for social unrest, United Nations Secretary-General Antonio Guterres said on Thursday, proposing fresh reforms to the international financial architecture. A growing debt crisis across the 1 billion-strong continent has seen a conflagration of civil unrest in recent months, after protests in Kenya, where police clashed with demonstrators rallying against proposed tax hikes, inspired people to take to the streets in Nigeria and Uganda over the cost of living. African nations have been seeking to restructure their debts through a rework architecture designed by the G20 called the 'Common Framework,' but the scheme did not as expected expedite talks between a myriad of leaders from Chinese state-owned banks to London-based asset managers and New York banks. Zambia in June became the first country to successfully restructure its debt through the scheme, more than three years after it defaulted on its loans. Guterres told a major China-Africa cooperation summit in Beijing that Africa's debt "situation is unsustainable and a recipe for social unrest". "They have no access to effective debt relief, scarce resources, and clearly insufficient concessional funding to respond to the basic needs of their population," he said. Guterres proposed "deep reforms to the outdated, ineffective and unfair international financial architecture" and further stimulus "to provide developing countries with the liquidity they need while seeking medium- and long-term solutions." Beijing, the world's biggest bilateral lender, is hosting 50 African nations for the ninth Forum on China-Africa Cooperation Summit this week, at which China's President Xi Jinping pledged 360 billion yuan ($50.70 billion) in fresh financing to the continent over the next three years. China approved loans worth $4.61 billion to Africa last year, the first annual increase since 2016. Guterres praised China's initiatives across Africa and said they could drive a "renewable energy revolution" and "be a catalyst for key transitions on food systems and digital connectivity." Angola's finance minister on Tuesday told Reuters that Luanda was considering proposals from Beijing, Brussels and elsewhere, with a view to quickly securing funds to help bring down inflation and do more through public-private partnerships. ($1 = 7.1005 Chinese yuan renminbi) (This story has been corrected to fix a typo in paragraph 2) Sign up here. https://www.reuters.com/world/africa/un-chief-warns-africas-inadequate-access-debt-relief-is-recipe-social-unrest-2024-09-05/

2024-09-05 05:04

Dollar down 5% from 2024 highs Investors bet on big US rate cuts ahead Dollar decline overdone, some strategists say Strength of US economy key to dollar trajectory NEW YORK, Sep 5 (Reuters) - The U.S. dollar's decline is gaining speed as anticipated interest rate cuts by the Federal Reserve threaten to end the greenback's years-long period of strength. The dollar has fallen 5% from its 2024 highs, close to its lowest level in about a year against a basket of its peers following a sharp drop last month. The reason is an imminent drop in U.S. interest rates. For years, a robust U.S. economy and persistent inflation kept rates far above those of other developed countries, making dollar-based assets more attractive and keeping it elevated even after the currency hit a two-decade high in 2022. That yield advantage is set to diminish now that inflation has cooled and Fed Chairman Jerome Powell said last month the "time has come" to start cutting rates, a process expected to kick off at the central bank's Sept. 17-18 monetary policy meeting. "We've always had the view that almost regardless of other circumstances, once the Fed starts cutting rates, that the dollar would lose ground," said Brian Rose, senior U.S. economist at UBS Global Wealth Management. "We still have that view." Getting the dollar's trajectory right is important for investors due to the currency's central role in global finance. A weaker dollar could make U.S. exporters' products more competitive abroad and lower costs for multinational companies converting foreign profits into greenbacks. How much further the dollar falls over the long term could depend on how deeply the Fed cuts rates in the months ahead, and how quickly other global banks follow suit. For now, the U.S. economy appears stronger than many of its peers. The yield gap between 10-year Treasuries and equivalent German bunds - recently around 160 basis points - has shrunk in recent months but remains around its five-year average of 167 basis points. Investors, however, are betting on big rate cuts ahead. Futures tied to the Fed's key policy rate show traders pricing in around 100 basis points of cuts this year, compared to about 60 basis points for the European Central Bank. Commodity Futures Trading Commission data tracking positioning by hedge fund and other speculative investors showed bets on the dollar swung net short to the tune of $8.83 billion for the week ended Aug. 27, the first bearish position in about six months. That compares to a net long of $32.6 billion in May. "The recent dovish tone from Powell suggests more cuts than initially expected," said Aaron Hurd, senior portfolio manager, currency, at State Street Global Advisors, who has recently reduced tactical bullish positions on the dollar. The U.S. government's August jobs report, due on Sept. 6, may offer clues on any further deterioration in what many policymakers have called a still-healthy job market. SLOW DECLINE? Several factors could prevent a deeper dollar decline, at least in the shorter term. August's sell-off, during which the dollar index lost 2.2%, has led some strategists to conclude the U.S. currency may have fallen too quickly. "While the Fed's long-telegraphed move in September does spell some dollar weakness in the fourth quarter, this recent move we've seen is a bit of an overreaction," said Helen Given, associate director of trading at Monex USA. Monex USA nevertheless sees the euro at $1.13 by June 2025, implying a drop of about 2% against the dollar. Rose, of UBS, has a similar target for the currency pair. Many are awaiting more evidence of a U.S. economic slowdown before turning more negative on the dollar. "The economy is slowing but it's still in a very healthy place," said Thanos Bardas, co-head of global investment-grade fixed income at Neuberger Berman. Investors also believe the winner of the U.S. presidential election in November could influence the currency's fortunes. The latest polls show the leading candidates, Republican Donald Trump and Vice President Kamala Harris, a Democrat, in a tight race. Trump has railed against the currency's strength, saying it hurts U.S. competitiveness. Yet many of his policies, such as tariffs and tax cuts, could strengthen the dollar, said Bardas. On Thursday, Trump told the Economic Club of New York that "we have to continue to have (the dollar) be the world currency," in response to a question about his use of economic sanctions. "We cannot lose our dollar standard, very important," he said. Steven Englander, head of global G10 FX research at Standard Chartered, wrote late last month that a Harris win could bring higher taxes and more pressure on the Fed to ease if economic activity slows. In the end, the market's reaction to lower U.S. rates is the likely factor that determines the dollar's course, said Kit Juckes, FX strategist at Societe Generale. Strong growth has provided the U.S. with an "insatiable appetite for foreign investment, matched with enthusiastic yield-hunting foreign investors," he wrote. "Now that growth is slowing and rates are coming down, we'll see how it plays out." Sign up here. https://www.reuters.com/markets/currencies/bears-circle-weakening-dollar-fed-rate-cuts-loom-2024-09-05/

2024-09-05 04:42

A look at the day ahead in European and global markets from Ankur Banerjee Markets hit the pause button after a selloff in equities since the start of the week but sentiment remained fragile, as worries re-emerged over the prospects for the U.S. economy and investors focused squarely on this week's job reports. Labour data on Wednesday suggested the U.S. jobs market was losing steam, raising expectations the Federal Reserve may resort to large interest rate cuts, while additional reports including Friday's non-farm payrolls data are keeping sentiment on edge. Futures indicated European bourses were set for a subdued open after Asian shares rose 0.4% on Thursday, clawing back some of the week's losses, although the MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab is still down 2.2% so far this week. Risk sentiment remained frail, with the yen holding on to its gains for the week as traders seek safe assets while the dollar was steady in Asian hours after weakness overnight. Hawkish rhetoric from the Bank of Japan also supported the yen after BOJ board member Hajime Takata hinted the central bank should stay on course to raise interest rates. While the spotlight this week will be on Friday's U.S. non-farm payrolls report, in the meantime Thursday's U.S. jobless claims reading and euro zone retail sales data will keep investors busy. The markets are keen for clues on whether data will dictate that the Fed cut interest rates by 25 basis points (bps) or 50 bps when it meets later this month. Traders added to wagers of a 50 bps cut following the job openings data and are now pricing in a 44% chance, up from 38% a day earlier. Investors are also pricing in 110 bps of cuts from the remaining three Fed meetings this year, and when you factor in the Fed's focus on the labour market, it looks like economic data in the next few weeks will be put under the microscope by increasingly skittish investors. Key developments that could influence markets on Thursday: Economic events: Euro zone August retail sales; August construction PMI data for Germany, France and euro zone Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-09-05/

2024-09-05 04:03

MUMBAI, Sept 5 (Reuters) - The Reserve Bank of India was likely selling U.S. dollars on Thursday to prevent the rupee from weakening past the key psychological level of 84, four traders told Reuters. The rupee was quoting at 83.9675 per U.S. dollar compared to 83.9650 in the previous session. The rupee "has not caught any relief" from the "helpful Asia cues" and again needs the help of RBI, a currency trader at a mid-sized private sector bank said. Other Asian currencies were higher on Thursday amid rising expectations the Federal Reserve will decide on a large rate cut at this month's meeting. Sign up here. https://www.reuters.com/markets/currencies/indian-central-bank-likely-selling-dollars-prevent-rupee-dipping-past-84-traders-2024-09-05/