(Kitco News) – Gold and silver prices are trading around unchanged levels in early U.S. trading Monday. The marketplace is uneasy to start the trading week, as there is civil unrest in China over its strict zero-Covid policies. Reports said there were demonstrations across China over the weekend. It’s the largest show of discontent since the Tiananmen Square protests in 1989. China is the world’s second-largest economy and the most populous nation. The geopolitical and economic consequences of a further escalation in protests and any crackdown by Chinese authorities would be huge. The gold and silver markets are weighing the bearish aspect of a slowing Chinese economy crimping consumer and commercial demand for metals and other raw commodities. However, some safe-haven demand amid the geopolitical uncertainty is limiting selling interest in gold and silver. February gold was last up $1.00 at $1,755.00 and March silver was down $0.025 at $21.41.
Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Traders will continue to very closely monitor fresh developments out of China.
Other big market events this week include a speech by Federal Reserve Chairman Jerome Powell on Wednesday afternoon and the U.S. employment report from the Labor Department on Friday morning.
The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are solidly lower, hit a 10-month low overnight, and are trading around $74.00 a barrel. The yield on the benchmark U.S. 10-year Treasury note is presently 3.692%.
U.S. economic data due for release Monday includes the Texas manufacturing outlook survey.
Technically, the gold futures bulls have the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the November high of $1,806.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at the overnight high of $1,778.50 and then at $1,790.00. First support is seen at the overnight low of $1,760.50 and then at $1,750.00. Wyckoff’s Market Rating: 5.5
The silver bulls have the overall near-term technical advantage. A choppy, 2.5-month-old uptrend is still in place on the daily bar chart. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at the November high of $22.50. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at last week’s high of $21.88 and then at $22.00. Next support is seen at the overnight low of $21.24 and then at $21.00. Wyckoff’s Market Rating: 6.0.
Tiny wines find home in B.C.’s market, as Canadians consider reducing consumption
VANCOUVER — Wine lovers have growing options on the shelf to enjoy their favourite beverage as producers in B.C. offer smaller container sizes.
Multiple British Columbia wineries over the last several years have begun offering their product in smaller, single-serve cans and bottles.
Along with making wine more attractive to those looking to toss some in a backpack or sip on the golf course, the petite containers leave wineries with options for a potential shift in mindset as Canadians discuss the health benefits of reducing alcohol consumption.
Vancouver-based wine consultant Kurtis Kolt said he’s watched the segment of the wine industry offering smaller bottles and cans “explode” over the last several years, particularly during the COVID-19 pandemic when people were meeting outdoors in parks and beaches and looking for something more portable to take with them.
“You’re not taking a hit on quality, you know? In fact, if someone is only going to be having a glass or two, you’re cracking a can and it’s completely fresh, guaranteed,” he said.
It’s also an advantage for people who want to drink less, he said.
“It’s much less of a commitment to crack open a can or a small bottle or a smaller vessel than it is to open a bottle,” he said.
“Then you have to decide how quickly you’re going to go through it or end up dumping some out if you don’t finish it.”
Last month, the Canadian Centre on Substance Use and Addiction released a report funded by Health Canada saying no amount of alcohol is safe and those who consume up to two standard drinks per week face a low health risk.
That’s a significant change from the centre’s 2011 advice that said having 15 drinks per week for men and 10 drinks per week for women was low risk.
Health Canada has said it is reviewing the report.
Charlie Baessler, the managing partner at Corcelettes Estate Winery in the southern Interior, said his winery’s Santé en Cannette sparkling wine in a can was released in 2020 as a reduced alcohol, reduced sugar, low-calorie option.
“We’ve kind of gone above and beyond to attract a bit of a younger, millennial-type market segment with a fun design concept of the can and sparkling, low alcohol — all these things that have been recently a big item on the news,” he said.
Santé en Cannette is a nine per cent wine and reducing the alcohol was a way to reduce its calories, he said. The can also makes it attractive for events like a picnic or golf, is recyclable, and makes it easier for restaurants that might want to offer sparkling wine by the glass without opening an entire bottle.
At the same time, the lower alcohol content makes it an option for people who might want a glass of wine without feeling the same effect that comes from a higher alcohol content, he said.
“So the health is clearly one incentive, but I think more importantly, so was being able to enjoy a locally made product of B.C. from a boutique winery, dare I say, with a mimosa at 11 o’clock and not ruin your day,” he said.
Baessler said the winery has doubled production since the product was first released to about 30,000 cans a year, which they expect to match this year.
He said there’s naturally a market for the product but he doesn’t expect it to compete with the higher-alcohol wine.
“So this isn’t our Holy Grail. This is something that we do for fun and we’ll never compete, or never distract, from what is our core line of riper, higher-alcohol wine,” he said.
Jeff Guignard, executive director of B.C.’s Alliance of Beverage Licensees, which represents bars, pubs and private liquor stores, said the industry has seen a shift in consumers wanting options that are more convenient.
“It’s not a massive change in consumer behaviour but it is a definitely a noticeable one, which is why you see big companies responding to it,” he said.
Guignard said the latest CCSA report is creating an increased awareness and desire to become educated about responsible consumption choices, which is a good thing, but he adds it’s important for people to look at the relative risk of what they’re doing.
“If you’re eating fast food three meals a day, I don’t think having a beer or not is going to be the single most important determinant of your health,” he said.
“But from a consumer perspective, as consumer preferences change, of course beverage manufacturers respond with different packaging or different products, the same way you’ve seen in the last five years, a large number of low-alcohol or no-alcohol beverages being introduced to the market.”
While he won’t predict how much the market share could grow, Guignard said non-alcoholic beverages and low-alcoholic beverages will continue to be a significant piece of the market.
“I don’t know if it’s reached its peak or if it will grow. I just expect it to be part of the market for now on.”
This report by The Canadian Press was first published Feb. 5, 2023.
Ashley Joannou, The Canadian Press
Indian tycoon Adani hit by more losses, calls for probe
NEW DELHI (AP) – Trading in shares in troubled Adani Enterprises gyrated Friday as the flagship company of India’s second-largest conglomerate tumbled 30% and then rebounded after more than a week of heavy losses that have cost it tens of billions of dollars in market value.
The debacle, which led Adani to cancel a share offering meant to raise $2.5 billion, has drawn calls for regulators to investigate after a U.S. short-selling firm, Hindenburg Research, issued a report claiming the group engages in market manipulation and other fraudulent practices. Adani denies the allegations.
Opposition lawmakers blocked Parliament proceedings for a second day Friday, chanting slogans and demanding a probe into the business dealings of coal tycoon Gautam Adani, who is said to enjoy close ties with Prime Minister Narendra Modi.
“We have no connectionâ€³ with the Adani controversy, Parliamentary Affairs Minister Pralhad Joshi told reporters outside Parliament on Friday.
In an interview with CNN News 18, Finance Minister Nirmala Sitharaman brushed off concerns that the losses would spook global investors and said India’s financial market was “very well regulated.”
“As a result, the investors’ confidence which existed before shall continue even now,” she said, adding that the controversy wasn’t “indicative of how well Indian financial markets are governed.”
Amit Malviya, the governing Bharatiya Janata Party’s information and technology chief, said in a television interview that the opposition was using Adani’s crisis to target the Modi government over a private company’s shares and their market movements. “Regulators are looking into” what happened, he said.
The market watchdog, the Securities and Exchange Board of India, has not commented. The Economic Times newspaper reported, citing unnamed SEBI sources, that it had asked stock exchanges to check for any unusual activity in Adani stocks.
Shares in Adani Enterprises fell as much as 30%, to 1,017 rupees ($12), on Friday. At the end of trading, the price had recovered to 1,531 rupees ($18.70) but was still down by 2%. The company’s share price has plunged more than 50% since Hindenburg released its report last week, when it stood at 3,436 rupees ($41). Stock in six other Adani-listed companies were down 5% to 10% on Friday.
So far there has been no indication that the company’s woes might threaten the wider financial sector in India. Its equities market is large enough to sustain the fallout at this moment, said Brian Freitas, a New Zealand-based analyst with Periscope Analytics who has researched the Adani Group.
“Adani stock forms a small part of the equities market and investor concerns right now are restricted to the company, not the whole system or market itself,” Freitas said. India’s Nifty and Sensex indexes were both higher on Friday.
It could take time for problems to surface, Shilan Shah of Capital Economics said in a report. “From the macro perspective there are few signs of contagion,” he said. “But it is too early to sound the all clear.”
The S&P Dow Jones indices said Thursday it would remove Adani Enterprises from its sustainability indices beginning Tuesday, following a “media and stakeholder analysis triggered by allegations of stock manipulation and accounting fraud.”
That might dent the Adani Group’s sustainability credentials and could affect investor sentiment, Freitas said.
Adani, who made a vast fortune mining coal and trading before expanding into construction, power generation, manufacturing and media, was Asia’s richest man and the world’s third wealthiest before the troubles began with Hindenburg’s report.
By Friday, his net worth had halved to $61 billion, according to Bloomberg’s Billionaire Index, where he dropped to the 21st spot worldwide.
He has said little publicly since the troubles began, though in a video address after Adani Enterprises canceled its already fully subscribed share offering he promised to repay investors. The company has said it is reviewing its fundraising plans.
Hindenburg’s report said it was betting against seven publicly listed Adani companies, judging them to have an “85% downside, purely on a fundamental basis owing to sky-high valuations.” Other issues in the report included concerns over debt, alleged use of offshore shell companies to artificially raise share prices and past investigations into fraud.
Adani’s speedy, debt-led expansion in recent years caused his net worth to shoot up nearly 2,000%. Even before last week, critics said his ascent was aided by his apparent close ties to Modi and his government. Analysts say he has been successful at aligning his priorities with those of the government by investing in key sectors, but point out that he also has major infrastructure projects in states that are ruled by opposition parties.
“The question now turns to the future of the Adani Group and how they will grow,” said Aveek Mitra, founder of Avekset Financial Advisory.
As a company heavily involved in infrastructure — from airports and ports to highways — it needs financing to grow in order to service its debt, which stands at $30 billion, out of which $9 billion is from Indian banks.
Adani may be able to sell some assets and continue its expansion, but at a much slower pace than earlier, Mitra said.
“Banks, financial institutions and investors will think five times before investing now,” he added.
Associated Press writer Ashok Sharma contributed to this report.
Ottawa expands price caps to Russian petroleum products to reduce revenues
The department says the maximum price for seaborne Russian-origin petroleum will be US $100 per barrel for “premium-to-crude” products as of Sunday, and US $45 for “discount-to-crude” products.
It says in a press release the new caps build on a Russian crude oil price limit announced in December, adding both moves will weaken President Vladimir Putin’s ability to fund the war against Ukraine.
The Department of Finance says the caps will be enforced by prohibiting buyers who do not abide by the price caps from obtaining services from companies in the G7 or Australia.
It says the price cap mechanism has been designed to reduce Russian revenues while recognizing the importance of stable energy markets and minimizing negative economic effects.
Finance Minister Chrystia Freeland says Russian oil revenues have already declined since the first price cap took effect and the additional price caps “will be another blow to Putin’s war chest.”
This report by The Canadian Press was first published Feb. 4, 2023.
This story was produced with the financial assistance of the Meta and Canadian Press News Fellowship.
The Canadian Press
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