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Gold Down 1% Due to Stronger Dollar

FILED - 16 March 2023, Bavaria, Munich: Gold bars and gold coins of different sizes lie in a safe on a table at the precious metal dealer Pro Aurum. Photo: Sven Hoppe/dpa
FILED - 16 March 2023, Bavaria, Munich: Gold bars and gold coins of different sizes lie in a safe on a table at the precious metal dealer Pro Aurum. Photo: Sven Hoppe/dpa
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Gold Down 1% Due to Stronger Dollar

FILED - 16 March 2023, Bavaria, Munich: Gold bars and gold coins of different sizes lie in a safe on a table at the precious metal dealer Pro Aurum. Photo: Sven Hoppe/dpa
FILED - 16 March 2023, Bavaria, Munich: Gold bars and gold coins of different sizes lie in a safe on a table at the precious metal dealer Pro Aurum. Photo: Sven Hoppe/dpa

Gold prices fell on Wednesday under pressure from a stronger dollar and uncertainty ahead of a key US inflation report that could provide more clarity about the Federal Reserve's September policy meeting.

Spot gold was down 1% at $2,500.03 an ounce by 1205 GMT. Prices on Tuesday rose 0.3% to $2,524.57, a record high for the closing price.

The US currency steadied on Wednesday, making dollar-priced commodities less attractive for buyers using other currencies. Recent declines in the dollar had pushed the currency to its weakest in more than a year, Reuters reported.

The dollar index, which measures performance against a basket of currencies, was last up 0.4%.

"There are a lot of moving parts today, and items like Nvidia results are hanging over the market for direction clues on (interest) rates," one gold trader said. "The Fed is rightly cautious right now and that's not helping people with direction. Cash is king today."

Markets are focused on the looming US personal consumption expenditure (PCE) data, the Fed's preferred measure of inflation, due on Friday.

Gold is up 21% so far this year, heading for the biggest annual growth since 2020, with support coming from expectations of US rate cuts, safe-haven demand driven by geopolitical and economic uncertainty as well as robust purchases by central banks.

The rally, which started in March and saw spot prices hitting a record high of $2,531.60 on Aug. 20, was initially led by strong demand in China until high prices muted its imports and shifted the focus to Western investor buying.

With a rate cut widely expected, physically backed gold exchange-traded funds (ETFs) started purchases again after several years of outflows and are heading for a fourth consecutive month of inflows in August.

Gold ETFs saw modest net inflows of 8 metric tons ($403 million) last week, led by North American funds, according to the World Gold Council.

Among other precious metals, spot silver retreated by 2.3% to $29.31 an ounce, platinum lost 1.8% to $936.55 and palladium was down 2.4% at $946.75.

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Chinese Oil Giant Looks to Revive Global Dealmaking

FILE PHOTO: A 3D printed natural gas pipeline is placed in front of displayed CNPC (China National Petroleum Corporation) logo in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
FILE PHOTO: A 3D printed natural gas pipeline is placed in front of displayed CNPC (China National Petroleum Corporation) logo in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
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Chinese Oil Giant Looks to Revive Global Dealmaking

FILE PHOTO: A 3D printed natural gas pipeline is placed in front of displayed CNPC (China National Petroleum Corporation) logo in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
FILE PHOTO: A 3D printed natural gas pipeline is placed in front of displayed CNPC (China National Petroleum Corporation) logo in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

CNPC, Asia's top oil producer, is reviewing its global strategy as it looks to revive dealmaking, eyeing gas liquefaction and deepsea drilling as well as building on its record of producing more from aging wells, the head of its research arm said.
China National Petroleum Corp (CNPC) and its listed arm PetroChina face stagnant oil output at home and a scarcity of new projects globally to boost reserves even as slowing economic growth and surging EV usage erode domestic demand, although mounting geopolitical barriers limit its room to maneuver, Reuters reported.
CNPC may rekindle investing in large oil and gas assets as an operator, as it did two decades ago with its $4 billion purchase of Canada's PetroKazakhstan and its takeover of Devon Energy's operations in Indonesia, said Lu Ruquan, who is director of CNPC's Economics and Technology Research Institute (ETRI) and is involved in strategy discussions.
The shift in strategy for Asia's biggest oil producer would be a return to the more acquisitive 1990s and 2000s when it moved into Sudan and Chad and carried out the Kazakh and Indonesian deals.
Lu likened the company's three decades of overseas investment to "a vessel sailing to midstream,” as he described the need for CNPC to embark on more global acquisitions.
"One needs to paddle harder, or else it will retreat backward," said Lu, the former head of strategy and development at the group's acquisition arm CNPC International before moving to ETRI, offering a rare glimpse into the strategic thinking of one of China's most powerful state enterprises.
CNPC has the firepower to make an impact on the oil and gas deals landscape, with PetroChina alone holding $37.5 billion in cash equivalents in 2023.
CNPC may try to expand on its liquefied natural gas (LNG) investments in Qatar, Lu said, following on from last year's deal that chains a small stake in QatarEnergy's massive gas liquefaction plants with a multi-year offtake agreement.
CNPC will also scout for opportunities in South American deep sea acreage adjacent to fields in Guyana where China's CNOOC Ltd, part of an Exxon Mobil-led consortium, struck massive new discoveries, he said.
PetroChina produces more than Exxon Mobil but its share of output from global operations shrank to 11% last year, according to company data, from a peak of nearly 14% in 2019. Chinese companies limited their global acquisitions after the 2014/15 oil price collapse.
Lu cautioned that given sanctions constraints in key hydrocarbon-rich targets such as Venezuela, Iran and Russia, more practical options include extending existing contracts such as those in Kazakhstan and Indonesia, which are nearing expiration.
"PetroChina's biggest strength is to extract more oil out of aging fields," he said, a capability developed over decades at the vast and still-productive Daqing field in northeast China.
Analysts at Wood Mackenzie predict a revival in international acquisitions by national oil companies (NOCs) after last year's two-decade low as the industry refocuses on oil and gas amid a slowdown in energy transition activity.
"International business development remains a major priority for China's largest NOCs, but they have adopted a cautious approach to deal-making in recent years," Woodmac said.
CNPC may be facing the highest geopolitical hurdles since it first ventured overseas in 1993, said Lu.
Chinese companies have refrained from new investments in Russia as other global firms exited following Russia's war with Ukraine, although China is one of Russia's biggest oil clients and a fast growing buyer of natural gas.
Strained relations with the United States have hindered opportunities there, where $250 billion in deals were made during last year's industry consolidation.
CNPC and PetroChina do not own any US producing assets and PetroChina delisted from the New York Stock Exchange in 2022 because of auditing scrutiny.
Lu also cautioned its alliances combining CNPC's construction and engineering expertise with oil majors' commercial and legal acumen, such as at Kashagan in Kazakhstan with Chevron, have limits as a business model.
"It's challenging to safeguard your interest and access sufficient operational information as a small investor. We would need strong commercial and legal skills which happen to be our weak links," he said.