Metals extend rally 📈
Gold extended its rally above $1,760 on Friday, up from $1,620 just a week ago. The price is the highest reached level in three months, boosted by better-than-expected US inflation data. Silver touched $22 for the first time since June, and other commodities surged as well after the CPI data.
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According to Elon Musk, lithium batteries are the new oil. He was in Texas to break ground on a lithium refinery Tesla wants to construct in Corpus Christi. Tesla plans to invest $375 million in the plant so it can supply more battery-grade lithium to the North American market.
Gold spiked to $2,081 after the Fed delivered a largely anticipated 25 bps rate hike. This is the third time gold has jumped to this level – the first time in 2020 and the second time in 2022. The yellow metal was also supported by higher safe-haven demand in the midst of rising risks of a global recession.
WTI crude fell by around 2% after dropping by more than 5% yesterday. WTI moved below $70 for the first time since late March. Investors weigh higher interest rates and a possible recession, which could reduce global energy consumption.
The platinum price extended its rally by an additional 3% above $1,100, the highest level since March 2022. Rising demand and stagnant supply push the market into a larger deficit, boosting platinum’s price higher.
Lithium prices dropped below CNY 182,500 per tonne in April, the lowest since October 2021. It’s down almost 70% so far from its record high of 600,000. Abundant supply and weak demand continue to push the price lower.
US natural gas jumped almost 10% to $2.24 after dropping to $1.9 for the first time since September 2020 last week. Forecasts for colder weather than usual and the worst quarter in history helped the natural gas jump.
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The New Zealand dollar (NZD) fell on all fronts on Friday. NZD/USD is down 1.4% and NZD/JPY dropped 1.2%, while GBP/NZD is up 1.3%.
The annual inflation rate in India dropped from 5.6% in March to 4.7% in April. Brazil’s inflation fell from 4.6% to 4.1%. However, inflation in Spain accelerated from 3.3% to 4.1%, and France’s inflation jumped from 5.7% to 5.9%.
The potential of AI, according to Mark Cuban, is “beyond anything I’ve ever seen,” and he compared ChatGPT to the early days of the internet. Cuban has a straightforward piece of advice for businesses: join the AI race or perish. Cuban stated, “There are two types of companies in the world: those who are great at AI and everyone else.”
The Bank of England followed market forecasts and increased the interest rates by 25 bps from 4.25% to 4.5%. This pushed borrowing costs to new heights not seen since 2008, as inflation still sits at double digits.
While the rest of the world still experiences relatively high inflation, China is close to deflation. China’s annual inflation rate dropped from 0.7% in March to 0.1% in April. The Netherlands’ inflation accelerated from 4.4% to 5.2%. Inflation in the Czech Republic fell from 15% to 12.7%. Inflation in Australia jumped from 4.6% in April to 5% in May.
The US Department of the Treasury and the IRS have filed 45 claims against the defunct crypto exchange FTX and its affiliates, totaling $44 billion. Alameda Research LLC was hit with a $20.4 billion tax bill from the IRS for payroll and partnership taxes. They also sued Alameda Research Holdings for over $17 billion.