American steel producer Nucor Corp $NUE has published its financial results for the fourth quarter, which fell short of expectations. The decline in revenue and profit is attributed to falling steel prices and related products, reflecting the broader challenges faced by the global steel market. The market saturation, due to both high domestic production and increased imports, continues to pose difficulties for industry players.
Key Results of the Quarter
According to the quarterly report, Nucor Corp's revenue and profit saw a significant decline in the fourth quarter of 2024. The main factors behind this include:
Barrick Gold Corporation $ABX.TO, one of the world's largest gold producers, has found itself entangled in a complex legal dispute with the Malian government. At the heart of the conflict are allegations of tax underpayment, asset confiscation, and demands for revised mining regulations in the country. Both parties have agreed to commence a new round of negotiations, which may prove to be a pivotal step toward resolving this significant issue.
The Core of the Conflict
The disputes between the Malian government and Barrick Gold began with accusations of tax underpayments amounting to $199 million. In response, the authorities seized approximately 3 tons of gold from the company, valued at $250 million. This decision forced Barrick to temporarily halt mining operations at one of its key sites in the region—Loulo-Gounkoto.
Venture Global LNG, a company specializing in exporting liquefied natural gas (LNG), has recently announced its successful raising of an impressive $1.75 billion. This significant step aligns with the first major initial public offering during Donald Trump's second presidential term. This investment reflects investors' confidence in the president's initiatives to bolster energy resource production in the United States.
A New Boost for the LNG Industry
Venture Global ranks as the second-largest LNG exporter in the United States. A pivotal political decision made by the Trump administration was the removal of the moratorium on issuing new LNG export permits. This measure eliminated previous barriers and opened up opportunities for the company to expand its activities on international markets significantly.
The global precious metals market has seen notable changes. On Friday, gold futures for February delivery traded lower on the COMEX exchange, a division of the New York Mercantile Exchange. According to recent data, their price dropped by 0.24%, reaching $2,744.24 per troy ounce. This development has drawn attention from professionals and experts in the precious metals sector.
Reasons Behind the Decline in Gold Futures Prices
The precious metals market has always been highly sensitive to external macroeconomic factors. The drop in February gold futures can be attributed to several key factors:
1. Strong U.S. Dollar: Gold prices traditionally have an inverse correlation with the value of the U.S. dollar. A stronger dollar index puts pressure on gold prices, as it makes the asset less appealing to international investors.
2. Federal Reserve Interest Rates: Expectations of further interest rate hikes by the Federal Reserve significantly impact gold’s performance. As gold does not generate yield, it becomes less attractive in environments where the returns on other financial instruments rise.
3. Economic Stabilization: A reduction in global financial market tensions often decreases demand for safe-haven assets like gold. During periods of optimism in riskier assets such as equities, investors tend to shift away from precious metals.
Future Gold Market Outlook
Despite the recent downturn, long-term prospects for gold remain challenging to predict and depend on a variety of factors. These include:
- Central bank policies and decisions on interest rates,
- Geopolitical tensions, which historically increase demand for gold as a safe-haven asset,
- Global inflation trends, which could drive renewed interest in physical precious metals.
February futures, like other contracts, serve as a barometer of market sentiment and can exhibit significant volatility depending on shifts in the global financial landscape.
At the time of writing, February gold futures have recorded a 0.24% decline, likely influenced by a robust dollar and expectations of tighter monetary policy. Nonetheless, the gold market remains a crucial indicator of economic and investment trends. During periods of uncertainty, its role as a safe-haven asset becomes even more prominent, and many investors continue to closely monitor price movements.
In recent days, financial markets have witnessed a significant surge in gold prices, reaching a one-month high during Asian trading on Thursday. The reasons behind this rally include the falling dollar and decreasing yields on Treasury bonds, both of which are linked to soft consumer inflation data. These factors are shaping new market expectations regarding the monetary policy of the Federal Reserve.
Gold Price Surge
Gold, traditionally viewed as a safe-haven asset, has tested the $2,700 per ounce mark. This increase has become a key indicator of growing expectations among investors that the Federal Reserve may continue to lower interest rates this year. Market participants are feeling optimistic about forecasts suggesting that declining inflation and a cooling labor market could enable the central bank to adopt a more accommodative approach. In addition, geopolitical tensions have often driven traders to seek the stability that gold provides, making it a preferred choice during uncertain times. With the rise in technological demand for gold in electronics and renewable energy sectors, its importance in various industries is also becoming increasingly evident.
Recent developments in Asian markets have significantly impacted gold prices. On Monday, the precious metal experienced a noticeable decline, primarily driven by expectations of a slower pace in interest rate cuts in the United States. Strong non-farm payroll data supported the US dollar, which in turn diminished gold's appeal. According to the latest analytical reports, investors are reassessing risks associated with monetary policy changes, a move that has immediately influenced market trends.
Gold has historically been regarded as a "safe haven" for investors seeking to safeguard their assets during times of economic uncertainty. Despite the current price dip, there are still several factors that sustain strong demand for the metal. The economic policies introduced during former President Donald Trump's tenure continue to raise questions about the long-term growth prospects of the US economy. As a result, gold remains an attractive option for investors looking to hedge against potential market upheavals.
The global gold market is anticipating a new rally: analysts from the Swiss financial holding UBS Group predict an increase in gold prices to $2,900 per ounce by the end of 2025. Furthermore, they believe that by the end of 2026, the price of the precious metal could reach $2,950 per ounce.
UBS is confident that the gold rally is far from over. Although a consolidation of prices may occur in the near term due to the strengthening dollar and concerns that additional fiscal stimulus in the U.S. could lead to an increase in Federal Reserve (Fed) interest rates, this is viewed as a temporary phenomenon. After a period of stabilization, the precious metal is expected to rise in value again.
The main factors influencing the rise in gold prices include:
Strong interest in asset diversification: investors are seeking ways to protect their capital amid instability.Increased global uncertainty: geopolitical risks and economic challenges are driving demand for safe assets.High macroeconomic volatility: fluctuations in financial markets are prompting investors to opt for reliable investments.
In an unstable global economy, gold traditionally serves as a safe asset. Investors worldwide are increasing their investments in precious metals, aiming to safeguard their portfolios against potential risks. Rising tensions in international relations, trade wars, and the pandemic's aftermath continue to impact the economic situation, further boosting demand for gold.
One factor that could temporarily restrain the rise in gold prices is the strengthening of the U.S. dollar. Additional fiscal stimulus in the U.S. may lead to a tightening of monetary policy and an increase in Fed interest rates. However, according to UBS analysts, these measures have a short-term effect, and in the long run, gold is expected to continue its rally.