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Metals feel the heat of Turkey crisis, US-China trade war – Livemint

21 Tuesday Aug 2018

Posted by landisrefining in market, precious metal market, scrap gold, scrap precious metals, US market

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Metals are bearing the brunt of global risks, which only seem to be mounting every month. August saw the US ratchet up trade tensions with Turkey, setting off a rout in emerging market currencies as investors took refuge in the dollar. Earlier, trade tensions between the US and China and economic sanctions on Russian entities roiled metal markets.

One could argue that the events triggering these falls are external to the industry and once they calm down, prices will regain lost ground. While that may be true, the tensions show no signs of calming down. Meanwhile, the fall in prices will hurt producers, who will now earn less than what they did a quarter ago.

Lower earnings will see investors slash their profit expectations, in turn affecting valuations. A bigger fear is that these tensions will slow global economic growth, causing lasting damage.

Those studying the economic effects may have their eyes on Dr Copper and whether it has got it right this time. The metal, nicknamed so for its apparent ability to predict economic conditions, has gone below $6,000 a tonne on London Metal Exchange and is down by 17.6% so far in 2018.

Copper also had some bad news of its own to report. The workers’ union at the world’s largest copper mine, Escondida, Chile, approved the terms of a new wage contract, last week. The possibility of a strike at the mine was one of the hopes that copper prices were holding on to, which has been dashed now.

If that settlement poses a supply risk, the market fears a demand risk as well. Fears that the Chinese economy may slow down still linger. Industrial output rose by 6% in July compared to the expected 6.3%, said a Reuters report. Fixed asset investment grew slower than expected at 5.5% in January-July compared to expectations of 6%.

China’s economic health is vital for commodities. In 2018, demand for refined copper is estimated to have risen 1% till April from a year ago, according to the International Copper Study Group. This was made up by China’s demand growing by 3%, with ex-China usage declining 1.5%. With the market showing a slight surplus, any slowdown in China could worsen the demand-supply balance.

These fears are what have led to a 29% decline in zinc prices in 2018 so far and by 10% in aluminium prices. Aluminium is a special case where the US sanctions on United Company Rusal Plc saw prices zoom on fears of a supply crunch and then fall back.

Domestic metal companies are likely to feel the heat from the decline in metal prices. However, producers will benefit from the depreciation of the rupee against the dollar. But their imports will become expensive, so those importing coal or other raw materials may pay more.

Read more via Metals feel the heat of Turkey crisis, US-China trade war – Livemint

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PRECIOUS-Gold prices hit two-week high on short covering, weaker dollar | Reuters

10 Tuesday Jul 2018

Posted by landisrefining in gold, market, precious metal market, scrap gold, scrap precious metals, US market

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china, gold, gold prices, trade tensions, United States, US dollar

* Dollar falls to lowest since June 14
* Spot gold hits highest since June 26
* Gold may rise into $1,268-$1,277/oz – technicals
* Silver, platinum, palladium at over one-week highs

By Karen Rodrigues

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BENGALURU, July 9 (Reuters) – Gold prices hit a near
two-week high on Monday as investors covered their short
positions and the dollar slipped to its weakest since mid-June,
while lingering U.S.-Sino trade tensions also supported the
bullion.

Spot gold was up 0.5 percent at $1,260.41 an ounce,
as of 0708 GMT, after touching its highest since June 26 at
$1,262.06.

U.S. gold futures for August delivery were 0.5
percent higher at $1,261.70 an ounce.
Gold is pushing higher on the dollar’s weakness in Asian
trading, said Tim Brown, trader at MKS PAMP Group, wrote in a
note.

The dollar index , which measures the greenback
against a basket of six major currencies, slipped to an over
three week low after U.S. jobs data showed slower-than-expected
wage growth.

The U.S. economy created more jobs than expected in June,
but steady wage gains pointed to moderate inflation pressures
that should keep the Federal Reserve on a path of gradual
interest rate increases this year.

A weak U.S. dollar makes greenback-denominated gold cheaper
for holders of other currencies.

“Some short covering has likely ensued given certainties
over the U.S.-Sino trade tensions on Friday. Still, the uptick
in risk appetite into the week may be short-lived if more trade
tariff threats are seen into the week ahead,” said OCBC analyst
Barnabas Gan.

The United States and China exchanged the first salvos in
what could become a protracted trade war on Friday, slapping
tariffs on $34 billion worth of each others’ goods and giving no
sign of willingness to start talks aimed at a reaching a truce.

President Donald Trump said on Thursday the United States
may ultimately impose tariffs on more than a half-trillion
dollars’ worth of Chinese goods.

“With the ongoing U.S.-Sino trade tensions, the resignation
of David Davis will likely be a side-show, though it may raise
some concerns amongst market-watchers depending on how the
overall Brexit issue progresses,” OCBC’s Gan added.

Brexit Secretary Davis resigned because he was not willing
to be “a reluctant conscript” to Prime Minister Theresa May’s
plans to leave the European Union, delivering a blow to the
British leader struggling to end divisions among her ministers.

Read more via PRECIOUS-Gold prices hit two-week high on short covering, weaker dollar | Reuters

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Will Gold Keep Reacting to US-China Trade War Jitters? – Market Realist

06 Friday Apr 2018

Posted by landisrefining in gold, market, precious metal market, scrap precious metals

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Will Gold Keep Reacting to US-China Trade War Jitters?

By Meera Shawn

9 hours ago

Trade war jitters?

Among the four precious metals that we’ll be discussing in this series, only gold saw gains on Wednesday, April 4. Gold prices for April futures were up 0.23% and closed at $1,335.8 an ounce. Silver was down 0.84% to close at $16.2. Platinum was down 1.4% and was the biggest loser among the four precious metals. It ended the day at $912.1 an ounce. Palladium was also lower by 1.1% and closed at $918.9 per ounce.

The rise in gold was most likely due to the ongoing unrest in the markets due to the US and China trade war. China said that it would impose additional tariffs on $50 billion worth of US imports. The tariffs would include products ranging from cars, chemicals, tobacco, and whiskey. This made markets jittery, which led the US dollar to fall and pushed gold higher. The sentiment didn’t provide a substantial impact on the other three precious metals.

Gold price versus Volatility Index 2018-03-26

 Correlated moves

The above chart compares the performance of gold to the volatility index (or VIX). It is a barometer for overall uncertainty in the market. The higher chances that we could see weak markets led to a rise in this index.

We have seen that gold has a strong relationship with market unrest (VIXY) (VXZ). The higher the tensions in the market, the higher the demand for gold. As gold is famous as a safety asset, investors often jump to this reserve-for-safety. Though the short-term relationship between gold (IAU) and VIX can diverge in a more extended run, we can expect the two to track each other.

Some of the mining companies that also increased on Wednesday with gold include Cia De Minas Buenaventura (BVN), Eldorado Gold (EGO), Alacer Gold (ASR), and Coeur Mining (CDE). They were up 2.4%, 2.5%, 1.5%, and 2.3%, respectively.

via Is Gold Still Taking Cues from Downturn in Equities? – Market Realist

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