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Sept 15 – Gold jumped 1% on Friday, helped by a weaker dollar and safe-haven buying after the United Auto Workers union kicked off strikes at three automakers in Detroit, while hopes around a likely pause in US interest-rate hikes lent further support.

Spot gold was up 0.7% at USD 1,924.27 per ounce by 1:56 p.m. EDT (1756 GMT). Bullion has risen 0.3% so far this week.

US gold futures settled 0.7% higher at USD 1,946.2 per ounce.

The dollar USD slipped 0.2% against its rivals following US data earlier in the day, making gold less expensive for other currency holders.

“Gold and silver are rallying on a wall of worry,” said Tai Wong, a New York-based independent metals trader.

United Auto Workers union launched simultaneous strikes at three factories owned by the “Detroit Three”, including Chrysler-owner Stellantis (STLAM), marking the most ambitious US industrial labor action in decades.

“The UAW strike looks like it could last some time given what the union is demanding. And the possible govt. shutdown at the end of the month is getting more press,” Wong said.

Gold is often used as a safe store of value during times of political and financial uncertainty.

Market participants now look forward to more clarity on the interest rate outlook from the US Federal Reserve at their policy meeting next week, in which the central bank is widely expected to leave interest rates unchanged.

“If the Fed leans a little bit more dovish next week, that would be significant and cause a rally in the gold market,” said Jim Wyckoff, senior market analyst at Kitco.

Meanwhile, China’s physical gold premiums soared to a new high this week, amid strong demand to shore up a depreciating yuan and a lack of fresh import quotas.

Elsewhere, silver rose 1.9% to USD 23.07 per ounce, platinum gained 2.2% to USD 926.55 and palladium eased 0.3% at USD 1,247.35. All three metals were heading for weekly gains.

(Reporting by Harshit Verma and Brijesh Patel in Bengaluru; Editing by Krishna Chandra Eluri)

BENGALURU, Sept 15 – Oil prices hit a 10-month high on Friday and posted a third weekly gain as supply tightness spearheaded by Saudi Arabian production cuts combined with optimism around Chinese demand to lift crude.

Brent crude futures rose 23 cents, or 0.3%, to settle at USD 93.93 a barrel, while US West Texas Intermediate futures was up 61 cents, or 0.7%, to close at USD 90.77 a barrel. Both contracts traded at 10-month highs on Tuesday for the fifth consecutive session, and gained about 4% on a weekly basis.

Oil prices are also on track for their biggest quarterly increase since Russia’s invasion of Ukraine in the first quarter of 2022.

Supply concerns continue to be a driving force for prices since Saudi Arabia and Russia this month announced an extension of their combined supply cuts of 1.3 million barrels per day to the end of this year, said Fiona Cincotta, an analyst at City Index.

Better-than-expected industrial output and retail sales data in China have also boosted oil prices this week, with the country’s economic conditions considered crucial to oil demand for the rest of this year, Cincotta added.

Data on Friday showed Chinese oil refinery processing rose by nearly 20% from a year earlier as processors kept run rates high to capitalise on high global demand for oil products.

Expectations of moderating US oil output have also boosted prices in recent weeks, Third Bridge analyst Peter McNally said.

“Supply growth from the US appears to be limited as producers there have taken drilling activity down nearly 20% from last year’s peak,” McNally noted.

The US oil rig count rose by two this week to 515, the most since April, data from oilfield services firm Baker Hughes showed on Friday. Compared to a year ago, however, the oil rig count is down by 84 units, the data showed.

(Reporting by Shariq Khan; Additional reporting by Natalie Grover and Sudarshan Varadhan; Editing by David Goodman, Nick Zieminski, Chris Reese, and Paul Simao)

 

NEW YORK, Sept 14 – An exchange-traded fund (ETF) that started trading on Thursday offers investors a new way to participate in the hot market for short-dated equity options, a risky trading strategy that has enthralled markets over the last year.

Miami-based ETF sponsor Defiance ETFs LLC launched the Defiance Nasdaq-100 Enhanced Option Income ETF on Thursday, the first ETF to use daily options income generation, the ETF sponsor said in a press release.

The ETF seeks to tap into the dual popularity of short-dated options contracts and the heightened interest in ETFs that seek to generate income through a combination of selling options and investing in US large-cap stocks.

Short-dated options contracts, with a day or less to expiry – dubbed 0DTE (zero days to expiry) options – have grown popular with investors over the past year, often making up as much as half the daily trading volume in the options on major ETFs and indexes, including the S&P 500 and the Invesco QQQ ETF.

Their increased usage has sparked concerns about their risks and the potential for a volatility shock that could ripple out to the broader stock market.

Investors have also flocked to ETFs that look to generate income and reduce portfolio volatility by selling options against stocks.

One such ETF – the JPMorgan Equity Premium Income ETF – has grown its assets to about USD 29.5 billion from about USD 12.4 billion a year ago. Assets at another, the Global X Nasdaq 100 Covered Call ETF, have grown to USD 8.1 billion from USD 6.9 billion a year ago.

“If there is one thing that investors are eager to receive, it is a steady stream of income, and we hope to provide just that,” said Defiance ETFs’ Chief Executive Officer Sylvia Jablonski.

The new actively managed ETF, QQQY seeks monthly yield for investors by combining Treasuries and short-dated Nasdaq-100 index options. The fund will seek to generate income by selling 0DTE put options looking to capture the premium in these highly volatile derivatives contracts, the ETF sponsor said.

“QQQY is attempting to timely scratch two itches, potential income from an asset that doesn’t typically generate income and exposure to the sudden popularity of trading ODTE options,” said Lois Gregson, senior ETF analyst at FactSet Research Systems.

Gregson, however, warned the ETF’s reliance on the highly volatile 0DTE options could leave it vulnerable to losses.

“The fund is ‘betting’ the market will rise more often than fall,” Gregson said, noting that the portfolio manager would have to buy back the short put options potentially at a loss.

“The strategy is similar to picking up dimes in front of a bulldozer. The income potential is there, but there are times you could also get run over,” Gregson said.

Defiance ETFs is set to launch two other ETFs – the Defiance S&P 500 Enhanced Options Income ETF JEPY and Defiance R2000 Enhanced Options Income ETF IWMY, which will employ a similar strategy with exposure to the S&P 500 and the Russell 2000 Indexes, respectively.

The success of the new ETF may hinge on the continued growth of interest in short-dated options, said Seth Golden, president of investment research firm Finom Group.

Golden said he will be watching liquidity and trading volume for the new product to gauge its viability.

The ETF’s shares were trading about flat at USD 20.13 at 12:45 p.m. (1645 GMT) with about 7,000 shares changing hands.

(Reporting by Saqib Iqbal Ahmed; Editing by Richard Chang, Ira Iosebashvili, and Daniel Wallis)

 

Sept 14 – Gold prices held near a three-week low on Thursday after higher-than-expected US producer prices and retail sales data raised worries US interest rates are likely to stay higher for longer, boosting the dollar and bond yields.

Spot gold rose 0.1% to USD 1,909.05 per ounce by 1:47 p.m. EDT (1747 GMT), after touching USD 1,900.81, its lowest since Aug. 23. US gold futures settled little changed at USD 1,932.80.

“We saw some headline inflationary data that was hotter than expected and as a result, we are seeing yields tick higher once again and continue to pressure the spot gold market,” said David Meger, director of metals trading at High Ridge Futures.

Data showed US producer prices increased by 0.7% in August, the most in more than a year, while US retail sales increased by 0.6% over Reuters’ expectation of 0.2% during the same period.

The US dollar index jumped 0.6% to over six-month high, reducing gold’s appeal for overseas investors, and the yield on the benchmark 10-year note also ticked higher.

“There are concerns the Fed does have the possibility of continuing to raise interest rates or yields continue to rise and that does apply some pressure to the gold market,” Meger said.

Although markets are pricing in that the Fed would hold rates unchanged at their policy meeting next week, there’s a 39% probability of a rate rise in November, according to the CME’s FedWatch Tool.

Higher interest rates dull the appeal of bullion, which bears no interest.

Earlier in the day, The European Central Bank raised its key interest rate to a record high of 4% on Thursday, but signaled this was likely to be its final move.

However, the USD 1,900 level for gold is fairly well-supported and will attract some bargain hunting, analysts said.

Silver fell 0.8% to USD 22.66 per ounce after hitting a four-week low, while platinum rose 0.6% to USD 905.87.

Palladium fell 1% to USD 1,246.10, after touching a three-week peak.

(Reporting by Harshit Verma in Bengaluru; additional reporting by Brijesh Patel; editing by David Evans and Krishna Chandra Eluri)

HOUSTON, Sept 14 – Oil prices climbed on Thursday to their highest this year, as expectations of tighter supply outweighed worries about weaker economic growth and rising US crude inventories.

Brent crude rose USD 1.82, or 1.98%, to settle at USD 93.70, after touching USD 93.89, its highest since November 2022.

US West Texas Intermediate crude (WTI) gained USD 1.64, or 1.85%, to USD 90.16, closing above USD 90 for the first time since November.

On Wednesday, the International Energy Agency said Saudi Arabia and Russia’s extended oil output cuts will result in a market deficit through the fourth quarter. Prices briefly pulled back on a bearish US inventories report before resuming their climb.

“That this genuinely bearish stock report only led to a brief temptation to sell speaks volumes and underlines the market mentality,” said Tamas Varga of oil broker PVM.

Both benchmarks remained in technically overbought territory.

Hedge funds have been buying crude oil futures for the past two or three weeks as “fundamentals continue to get stronger, driven mostly by heavy demand for both gasoline and diesel,” said Dennis Kissler, senior vice president of trading at BOK Financial.

A day before the IEA report, the Organization of the Petroleum Exporting Countries (OPEC) issued updated forecasts of solid demand and also pointed to a 2023 supply deficit if production cuts are maintained.

“The market is getting increasingly nervous about the sufficiency of supply,” said John Kilduff, partner at Again Capital.

“Russia and Saudi are acting in a way that could materially constrain supplies as we get into the peak northern hemisphere demand season, for the winter period,” Kilduff added.

The European Central Bank raised its key interest rate to a record peak but signaled this was likely its final move to tame inflation.

Investors see a 97% likelihood the US Federal Reserve will hold interest rates steady in its next meeting on Sept. 20, according to the CME FedWatch Tool.

Meanwhile, China’s central bank said it would cut the amount of cash that banks must hold as reserves for the second time this year to boost liquidity and support the country’s economic recovery.

China is the world’s second-largest oil consumer and its economic recovery has remained choppy, worrying markets about demand.

(Reporting by Arathy Somasekhar in Houston, Alex Lawler in London; Additional reporting by Robert Harvey and Natalie Grover in London and Jeslyn Lerh in Singapore; Editing by Jane Merriman, David Gregorio, and David Evans)