Category: US/Midday Session Brief

Surging Gold Prices Hit China’s Demand: Sell Now?

Posted on by Olumide Adesina

Gold rose on Friday as expectations for US inflation data were met, supporting speculation that the Fed may continue to lower interest rates later this year.  Spot gold was up 0.8 percent to $3,778.62 per ounce following a record high of $3,791 earlier in the week.

The bullion metal increased by roughly 2.1% this week. Personal income and spending were a tenth above expectations, but US gold futures for December delivery settled 1% higher at $3,809, while the monthly PCE data is in line.

The US Personal Consumption Expenditures (PCE) price index increased 2.7 percent year-over-year in August, which was in line with economists’ expectations in a Reuters poll. Despite this data, the Fed will still proceed with another cautious rate cut at its October meeting.

The CME FedWatch Tool now shows an 88 percent chance of a rate cut in October and a 65 percent chance of another in December. Commerzbank’s commodity analyst Barbara Lambrecht said that while gold prices are still rising and drawing significant ETF inflows, high prices are hurting physical demand as net imports from Hong Kong fell 39% month over month, and China’s August imports fell 34% month over month.

While some people are attracted to the steadily rising prices and gold ETFs are experiencing significant inflows (as we previously reported), others are being put off by high prices: China’s gold imports in August were 3 percent lower than the previous month.

The decline in Hong Kong’s net gold imports was even more severe, dropping 39% to just under 27 tons from July. An ounce of gold is reportedly being sold by gold dealers for the biggest discounts since May 2020, with prices ranging from $21 to $36.

Overbought Gold (XAU/USD) Faces Pullback, U.S. Government Reserves Hit Century-Low

Posted on by Olumide Adesina

Gold held steady near its record high on Wednesday as investors evaluated Federal Reserve Chair Jerome Powell’s cautious remarks about possible interest rate cuts and anticipated US inflation data later in the week.

 

The pressure was also increased by mild profit-taking. Spot gold remained steady at $3,765.29 an ounce as of 0403 GMT.

The price of gold reached a record high of $3,790.82 on Tuesday. Gold futures for December delivery dropped 0.5 percent to $3,798.50. Powell stated on Tuesday that the central bank must continue balancing the risks of high inflation and a weakening labor market in future rate decisions, despite disagreements among his colleagues on both sides of the policy divide. Current gold prices are influenced by Powell’s balanced speech, which included no clear signals of imminent rate hikes, along with overbought technical indicators that encourage profit-taking. A slight decline in gold prices might occur today, but a bullish outlook still prevails.

While central banks worldwide are accumulating gold reserves at a rate not seen in nearly 50 years, the United States’ gold reserves have fallen to their lowest level in 90 years. As a result, gold holdings outside the US have reached a 49-year high, highlighting this divergence.

US policymakers will need to reconsider their stance. This widening gap marks an important shift in global finance. At one time, the US owned more than half of the world’s gold reserves.

The trend is not limited to gold hoarding; gold now accounts for a larger share of foreign central banks’ international reserves than US Treasury bonds for the first time since 1996.

Even though gold prices have hit new all-time highs, a key survey of institutional investors shows that a speculative frenzy has not yet developed, suggesting the rally may have more room to run..

OpenAI’s Mega $100 Billion Nvidia Pact Sparks NVDA’s Bullish Breakout

Posted on by Olumide Adesina

Nvidia plans to invest up to $100 billion in OpenAI to support the development of new data centers and other artificial intelligence infrastructure.

This partnership has been positively received by investors, posting a 4% increase in Nvidia’s stock during trading in New York. The stock has now risen by approximately 37% this year, solidifying Nvidia’s position as the most valuable company.  OpenAI is currently the largest tech startup globally.

This historic agreement underscores the increasing demand for AI tools like ChatGPT and the significant processing power required to operate them.

The companies announced that they had signed a letter of intent for a strategic deal. With Nvidia’s advanced chips, OpenAI will be able to build data centers with a minimum power capacity of 10 gigawatts, which will be utilized for training and running AI models. According to sources familiar with the situation, the funding will be disbursed in installments, with the first $10 billion expected upon finalization of the agreement.

These sources, who requested anonymity due to the confidential nature of the discussions, indicated that Nvidia’s investment will also include acquiring a stake in OpenAI.

The two companies are leading a global initiative to establish data centers for the next generation of artificial intelligence tools, a project anticipated to cost trillions of dollars. This endeavor requires substantial amounts of electricity, servers, cooling systems, and advanced chips. To put it into perspective, 10 gigawatts is equivalent to New York City’s peak electricity demand, indicating the vast scale of the Nvidia-OpenAI project. “With the deployment of 10 gigawatts to power the next era of intelligence, this investment and infrastructure partnership represents a significant leap forward,” stated Jensen Huang, CEO of Nvidia.

Trump’s $100K H-1B Hammer: Infosys, Wipro, Cognizant Stocks Plunge on Visa Fee Shock

Posted on by Olumide Adesina

The Trump administration announced that it will require companies to pay $100,000 annually for H-1B worker visas, which could have a significant negative impact on the technology sector that primarily relies on skilled workers from China and India. Trump has initiated a comprehensive crackdown on immigration, including measures aimed at limiting certain types of legal immigration.

One of the most notable changes to temporary employment visas made by his administration is the modification of the H-1B visa program. The fee for H-1B visas is set at $100,000 per year, and major companies are reportedly in agreement with this requirement.

Secretary of Commerce Howard Lutnick stated, “If you are going to train anyone, it will be a recent graduate from one of our nation’s best universities. Teach Americans.” He urged companies to “stop hiring people to replace us.”

US-listed shares of Indian tech companies, such as Infosys and Wipro, as well as shares of Cognizant Technology Solutions—an IT services company that relies heavily on H-1B visa holders—closed down between 2% and 5%. According to government statistics, about two-thirds of jobs filled through the H-1B program are in the computer industry; however, employers also utilize the visa to hire engineers, teachers, and healthcare professionals. Last year, approximately 71% of all H-1B visas granted went to Indian nationals, making India the largest beneficiary, while China accounted for 11.7%.

The tech sector, which contributed millions of dollars to Trump’s presidential campaign, has expressed concerns about his threats to crack down on H-1B visas.
Critics of the program, including many American workers in the technology sector, argue that it allows companies to suppress wages and exclude qualified Americans from job opportunities.

Conversely, proponents, such as Elon Musk, the CEO of Tesla, believe that the program attracts highly skilled individuals essential for addressing talent shortages and maintaining the competitiveness of businesses.

Musk, a naturalized U.S. citizen originally from South Africa, previously held an H-1B visa. He argues that increasing fees “creates a disincentive to attract the smartest talent in the world to the U.S.” According to Deedy Das, a partner at Menlo Ventures, a venture capital firm, “If the U.S. stops attracting top talent, it significantly diminishes its capacity to innovate and grow the economy.” The new fees could drastically increase expenses for businesses, particularly for start-ups and smaller tech companies.

Crude Dips as Russian Disruptions Limit Downside

Posted on by Olumide Adesina

Crude oil prices saw a minor decrease on Wednesday. Oil traders are anxiously awaiting the Federal Reserve’s decision on interest rate cuts due to persistent geopolitical concerns that are keeping prices low. Brent crude futures fell to $68.30 a barrel, while West Texas Intermediate crude futures fell to $64.40 a barrel.

Concerns about possible disruptions in Russian oil supplies were a major factor in the recent price increase.

 

Investors are also looking forward to the results of the Federal Reserve’s meeting on September 16–17, which will include discussions involving new governor Stephen Miran, who is currently on leave from the Trump administration, and Lisa Cook, another policymaker who is facing removal threats from President Donald Trump. It is widely expected that the central bank will lower interest rates by 25 basis points during this meeting, a move that could stimulate economic growth and boost demand for fuel.

 

Additionally, the potential for further 25-basis-point rate cuts in October and December suggests that any “buy-the-rumor, sell-the-fact” behavior in risky assets, such as crude oil, is likely to be short-lived.

 

The American Petroleum Institute recently reported that, during the week ending September 12, distillate stocks increased, while crude and gasoline stocks declined. Specifically, distillate inventories rose by 1.91 million barrels, crude stocks decreased by 3.42 million barrels, and gasoline inventories fell by 691,000 barrels. Analysts had predicted a decrease of roughly 900,000 barrels in crude inventories, an increase of about 1 million barrels in distillate stockpiles, and a rise of approximately 100,000 barrels in gasoline stockpiles, according to a Reuters poll.

Gold Crumbles Below Record High as Dollar Steals Shine

Posted on by Olumide Adesina

The bullion asset drifts lower on Wednesday after failing to find acceptance above the $3,700 mark the day before. Price action showed the yellow metal appears to have ended a three-day winning streak at the all-time high.

The greenback made a slight recovery from its lowest level since early July, putting pressure on precious metals amid repositioning trades ahead of the important FOMC rate decision.

Despite a positive fundamental backdrop, the downside for XAU/USD remains limited.

Gold traders have been factoring in the potential for a more aggressive policy easing by the US Federal Reserve (Fed) amid indications of a softening labor market. The dollar’s recovery attempt may be restrained, and the non-yielding gold may continue to receive some support. Additionally, the cautious market sentiment and growing geopolitical tensions may help limit losses for the safe-haven XAU/USD pair. Traders may also choose to hold off until they receive additional warnings.

The US dollar marginally recovers from a one-and-a-half-month low as bears choose to reduce their wagers in anticipation of the pivotal FOMC policy decision. Consequently, following the recent blowout rally to a record high, there is some profit-taking around the gold price on Wednesday during the Asian session.

Retail sales increased by 0.6 percent in August, for the third consecutive month, and at a faster rate than expected, according to a report released by the US Census Bureau on Tuesday.

Investors are sure that the US Federal Reserve will cut borrowing costs by at least 25 basis points to help the softening labor market. Additionally, by the end of this year, traders will have been factoring in the potential for two more rate cuts

Trump Hails China Trade Talks Amid TikTok Deal Breakthrough

Posted on by Olumide Adesina

The U.S. may finally address concerns surrounding TikTok. In a post on Truth Social, President Trump claimed that a deal was reached during the recent U.S.-China trade talks.

He stated that discussions with China were progressing well and that an agreement had been reached regarding a specific company, widely understood to refer to TikTok. Trump wrote, “The United States and China’s major trade meeting in Europe has gone very well and is nearing its conclusion. Additionally, an agreement has been reached regarding a certain company that our nation’s youth are eager to preserve. They will be overjoyed! I will meet with President Xi on Friday. The partnership remains very strong!”

TikTok has until September 17 to decide whether to sell its U.S. operations or shut them down entirely. Trump is expected to extend the deadline once more, marking the fourth extension since his return, as trade negotiations continue to show progress.

Treasury Secretary Scott Bessent stated that a “framework” agreement for TikTok already exists between the two parties.

He remarked, “The commercial terms have been agreed upon, but it’s between two private parties.” Trump mentioned in June that TikTok was being considered for purchase by a group of “very wealthy people.” He indicated that potential bidders could include Elon Musk, the CEO of Tesla, Larry Ellison, the chairman of Oracle, and others. Following this announcement, Oracle’s stock rose by over 3%.

A second round of trade negotiations between the U.S. and China is currently underway in Spain, aimed at easing tensions between the two largest economies in the world. Earlier today, China accused Nvidia of violating its anti-monopoly laws following an initial investigation and confirmed that further inquiries into chip manufacturers are ongoing.

Trump has expressed optimism about the possibility of a breakthrough; however, restrictions on advanced AI GPUs are expected to remain, and current tariffs will still be in effect.

Elon Musk’s $1 Billion Tesla Stock Buy Sparks 6% TSLA Surge

Posted on by Olumide Adesina

Elon Musk announced that he purchased Tesla stock for the first time since February 2020, leading to a surge in share prices. Musk made a significant insider purchase on Friday, acquiring 2.57 million shares at various prices, totaling approximately $1 billion.

Traders viewed this as a vote of confidence from the outspoken CEO.  Tesla’s stock price increased by around 6%.

 

Shares closed slightly lower for 2025, despite the recent rally, with the stock rising more than 25% over the past three months. This type of purchase is rare for Musk; according to Verity data, he last acquired about 200,000 shares on February 14, 2020, for around $10 million. Verity notes that this is the most valuable purchase he has made to date.

Earlier this month, the company announced that it would seek shareholder approval for a new compensation package for Musk, potentially reaching up to $975 billion, contingent on several ambitious milestones. Before Friday’s acquisitions, Musk owned approximately 13% of Tesla.

Tesla’s stock has encountered difficulties due to a decline in sales, which can be partly attributed to Elon Musk’s political actions that have negatively impacted the brand, as well as the removal of certain electric vehicle incentives by the Trump administration. According to TipRanks.com, analysts hold mixed opinions about the stock. The Wall Street consensus price target indicates a potential decrease of approximately 20% from its current level.

While many are optimistic that Musk can effectively restructure the business to focus more on autonomous driving, artificial intelligence, and robotics, he is also seeking shareholder approval for Tesla’s investment in his latest venture, xAI.

Google: Alphabet Hits $3 Trillion, Citi set $280 Price Target

Posted on by Olumide Adesina

Alphabet became the latest sign that sentiment toward the parent company of Google was improving, joining a select group of businesses valued at over $3 trillion. A market capitalization of just over $3 trillion was reached after shares increased by as much as 4.3 percent to $251.22.

Nvidia Corp. and Alphabet are among a shortlist of companies worth more than $3 trillion. Microsoft Corporation and Apple Inc. are the only other publicly traded stocks valued higher than that.

A long-awaited antitrust ruling spared the search giant from the most severe penalties that regulators had proposed, such as the sale of Alphabet’s Chrome browser. This decision followed Alphabet’s second-quarter earnings report, which showed that the demand for artificial intelligence products is boosting sales.

Citigroup Inc. analyst Ron Josey raised his price target for the stock from $225 to $280, citing “an accelerated product development cycle that is beginning to emerge with greater Gemini adoption across both its Ads and Cloud businesses.” “In what we believe to be a relatively healthy online advertising market, there is increased clarity regarding its legal and regulatory challenges,” added Joey.

“We think Google is performing better across its halo of products, experiencing greater demand, and delivering improved PR,” the statement reads, despite competition facing the company’s search business.

In a note to clients, he stated, “We believe Google is executing better across its halo of products, experiencing greater demand, and delivering improved profitability.”

US-China Talks Heat Up: Trade, TikTok Take Center Stage

Posted on by Olumide Adesina

US and Chinese representatives discussed TikTok, trade, and the economy during a day of high-level talks in Madrid.  A Chinese delegation led by Vice Premier He Lifeng and a US delegation led by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer met for nearly six hours on Sunday.

Bessent said “We’ll start again in the morning.”. The status of ByteDance Ltd. and matters about national security are on the agenda. This week is the deadline for TikTok to reach an agreement to continue operating in the US.

As early as October, when they are scheduled to attend a summit in South Korea, officials were also expected to set the stage for a possible meeting between Xi Jinping and Donald Trump.

During a press briefing, Trump stated that negotiations regarding TikTok are “going fine,” but emphasized that the platform’s future will ultimately depend on actions taken by China. He mentioned, “Depending on the situation, we might either let it die or— I’m not sure,” adding that it’s “up to China.” 

 

Furthermore, the Chinese Ministry of Commerce announced that a delegation will arrive in Spain from September 14 to 17.

This trip is part of a broader agenda for September. A U.S. official is scheduled to meet with counterparts in both Spain and Britain during his trip, planned for December 12 to 18. This week, Trump is also set to travel to the UK.

China has launched two investigations into the U.S. semiconductor industry, including an anti-dumping probe focused on specific American-made analog IC chips. These actions were taken ahead of the talks scheduled for Sunday and followed the United States’ decision to add 23 additional Chinese companies to its entity list.

This list imposes restrictions on companies that are considered to be acting against the national security or foreign policy interests of the United States.