Mid-East on 'Edge of War', Gold Hits Month-End Record Ahead of the Fed
Wednesday, 7/31/2024 14:43
The PRICE of GOLD held firm at last night's sudden 1-week highs in London trade on Wednesday, heading for a new record month-end finish as global stock markets rose ahead of today's US Federal Reserve decision on Dollar interest rates.
Rising stock markets came despite airstrikes in Beirut and Tehran – blamed on Israel and attacking Iran-backed targets – killing the top Hezbollah commander in Lebanon and the leader of Gaza's Hamas, threatening a wider Middle East war.
Industrial commodities reversed yesterday's
copper and oil drop after new Chinese data said factory and services sector activity in the world's 2nd largest economy held virtually unchanged this month from June on the NBS PMI surveys.
Gold rose in all currencies except the Japanese Yen, which hit 19-week highs versus the Dollar after the Bank of Japan raised Tokyo interest rates to the highest in 15 years at 0.25% per annum and vowed to cut the pace of its government bond-buying in half at the start of 2026.
Like gold bullion in Dollars, Yuan, Euros and UK Pounds,
silver prices also traded at the highest in a week, reaching $28.75 per Troy ounce to recover 5.2% from Monday's 2.5-month low.
Crude oil rose too, reversing yesterday's 1% drop in European benchmark Brent but heading for a $5 loss across July at $80 per barrel, its lowest monthly close so far in 2024.
Trading at $2420 per Troy ounce, gold priced in the Dollar showed a $90 rise from the end of June, gaining 3.8% to head for a new record monthly finish.
Copper meantime rallied from near 4-month lows but heading for its weakest monthly close since March, down more than 1/5th from mid-May's record peak.
Israel on Wednesday didn't take official responsibility for killing Fuad Shukr or Ismail Haniyeh, but CBS says the US assessment is that Tel Aviv ordered both attacks, "pushing the Mideast to the edge of a regional war," according to Israeli newspaper
Haaretz.
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Washington
denied any fore-knowledge of the attacks while Berlin and Moscow called separately for all parties to "exercise maximum restraint".
Iran's theocratic leadership vowed "harsh punishment" for the attack on Tehran, which
killed Hamas' "brave leader" after he attended the inauguration of new 'reformist' Iranian President Masoud Pezeshkian.
The Israeli Government Press Office meantime
published and then deleted a post from its Facebook account with the word "eliminated" written across Haniyeh's face in large black lettering.
Japan's central bank seems to have leaked its decision overnight, with the Nikkei newspaper saying at 2am in Tokyo that the BoJ was "considering" exactly the "aggressive" policy changes then announced 11 hours later.
"Overall, higher rates will benefit households," the
Nikkei
quoted a BoJ "source".
Tokyo's stock market opened the day 1.1% lower, but then rallied and rose sharply following bullish comments on the policy decision from BoJ Governor Kazuo Ueda, ending Wednesday 1.5% higher to rise within 5% of mid-July's new all-time peak.
Hedge funds and other speculative traders had already "made
a massive retreat from their bearish bets" against the Yen said a note Tuesday from analysts at Swiss banking giant UBS.
Tokyo authorities including the Bank of Japan – which now owns more than half of all the nation's central government debt after decades of massive QE bond buying – perhaps spent $40 billion of public funds buying the Yen to drive it higher this month from new 4-decade lows, says the Reuters news agency.
New York equity futures meantime rose 1.1% ahead of Wednesday's opening, more than reversing yesterday's 0.5% drop in the S&P500 index ahead of more mega-tech earnings reports.
Since 10 July, when Fed chairman Jerome
Powell told Congress that he is preparing to cut interest rates – a move not expected at today's meeting – the so-called Magnificent Seven have
lost $2.6 trillion in stock-market value, led by a near 1/4 drop in
AI chipmaker Nvidia (Nasdaq: NVDA).
The 'Mag 7' sell-off accelerated last Wednesday on weaker quarterly earnings from electric-car marque Tesla (Nasdaq: TSLA) and doubts over the value of AI investments made by Google search giant Alphabet (Nasdaq: GOOG).
Shares in Microsoft (Nasdaq: MSFT) fell further last night after reporting lower than expected cloud-computing and data storage revenues, but the Magnificent 7 were expected to rally Wednesday, led by NVDA, after the software giant talked up its plans for further investment in AI
Facebook owner Meta (Nasdaq: META) is due to report its Q2 earnings today at the same time as the Fed makes its July interest-rate statement. Thursday then brings quarterly earnings reports from smartphone brand Apple (Nasdaq: AAPL) and e-tail giant Amazon (Nasdaq: AMZN).
Gold priced in the US Dollar has meantime held unchanged around $2400 per Troy ounce since Chairman Powell's "dovish" comments to Congress 3 weeks ago, while bond prices have risen – pushing 10-year Treasury yields down from 4.30% to 4.15% per annum.
Industrial metals copper, aluminum and steel have sunk 10% or more, but 'crypto currency' Bitcoin has risen nearly 15%.
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