Gold rises as Fed rate cut bets pressure dollar, yields
Gold prices saw an increase. This happened because the U.S. dollar weakened. Treasury yields also went down. Weak U.S. jobs data increased expectations of a Federal Reserve rate cut in September. Silver, platinum also experienced gains. Palladium saw a slight decrease. Investors are closely watching upcoming economic data releases. These include China Caixin Services PMI and US ISM N-Mfg PMI.
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The executive order issued by US President Donald Trump to impose 25 per cent additional tariffs on goods from India includes a warning of sorts for other countries importing oil from Russia—the risk of attracting 25 per cent additional tariffs from the US. A specific section of the executive order—section 5—states that senior Trump administration officials can recommend action against countries importing Russian oil 'directly or indirectly', including the additional ad valorem import duty of 25 per cent. Apart from India, other key importers of Russian crude oil include China and Turkey. 'The Secretary of Commerce, in coordination with the Secretary of State, the Secretary of the Treasury, and any other senior official the Secretary of Commerce deems appropriate, shall determine whether any other country is directly or indirectly importing Russian Federation oil,' Trump's executive order read. 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As per the executive order, the term 'Russian Federation oil' is defined as crude oil or petroleum products 'extracted, refined, or exported' from the Russia, 'regardless of the nationality of the entity involved in the production or sale of such crude oil or petroleum products'. It defines indirect imports of Russian Federation oil as 'purchasing Russian Federation oil through intermediaries or third countries where the origin of the oil can reasonably be traced to Russia, as determined by the Secretary of Commerce in consultation with the Secretary of State and the Secretary of the Treasury'. According to the Finland-based think-tank Centre for Research on Energy and Clean Air (CREA), China, India, and Turkey are the major importers of Russian crude oil. Other importers of Russian crude included the European Union and Myanmar. 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For Trump, who wants the three-year-old Russia-Ukraine war to end within days, this is an opportune time to pressurise countries like India and China over their Russian imports, given the sensitive trade negotiations that these countries are holding with the US. Last week, Trump posted on his social media platform Truth Social that a tariff of 25 per cent plus an additional unspecified tariff 'penalty' would be imposed on India for New Delhi's defence and energy imports from Moscow. Then earlier this week, Trump announced that he will impose additional tariffs on India for profiting from Russian oil. Responding sharply to Trump's remarks, India termed Trump's actions as 'unfair, unjustified and unreasonable'. In a statement on Wednesday, Ministry of External Affairs spokesperson Randhir Jaiswal said that it is 'extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest'. On Monday, Jaiswal had said that while it has been targeted by the US and the European Union for importing oil from Russia, these imports began as its traditional supplies were diverted to Europe, and the US at that time 'actively encouraged such imports by India for strengthening global energy markets stability'. When Russia invaded Ukraine in February 2022, Moscow's share in New Delhi's oil imports was less than 2 per cent. With much of the West shunning Russian crude following the invasion, Russia began offering discounts on its oil to willing buyers. Indian refiners were quick to avail the opportunity, leading to Russia—earlier a peripheral supplier of oil to India—emerging as India's biggest source of crude within a matter of months, displacing the traditional West Asian suppliers. Russia now accounts for 35-40 per cent of India's total oil imports by volume. As Europe decided to stop the import of refined petroleum fuels from Russia, Indian refiners increased fuel exports to the continent. Despite the noise from sections of the West against India over the country's hefty purchases of Russian crude, this shift in oil and petroleum product trade had Washington's blessings, as the US wanted energy markets to remain stable and well-supplied, according to various US officials who served in the Joe Biden administration. At an event in May 2024, the then US Ambassador to India Eric Garcetti said, 'Actually, they (India) bought Russian oil because we wanted somebody to buy Russian oil at a price cap. That was not a violation or anything. It was actually the design of the policy because as a commodity we didn't want oil prices going up, and they fulfilled that.' Russian oil was and continues to be sanction-free, and only a price cap of $60 per barrel was introduced in December 2022 on seaborne Russian crude by the US and its allies. The cap prohibits export of Russian seaborne crude at over $60 per barrel if the trade involves Western shipping or insurance services. In April last year, senior US officials had said at a New Delhi event that the US neither expected India to reduce its oil imports from Russia and had not even requested it to do so. The then US Treasury Assistant Secretary for Economic Policy Eric Van Nostrand had said that the objective of the sanctions and G7 price cap regime was not to push Russian crude out of the market, but to keep it flowing while limiting Kremlin's revenue from oil exports, which in turn impaired Russia's ability to fund the war in Ukraine. Anna Morris, the then US Assistant Secretary for Terrorist Financing and Financial Crime, said at the same event that from a technical standpoint, Russian oil once refined into petroleum fuels and products could no longer be considered of Russian origin, dismissing the argument that India refiners were facilitating Russian petroleum's entry into Europe. Sukalp Sharma is a Senior Assistant Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 13 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More
