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Gold Hits Record High on Global Uncertainties

Gold Hits Record High on Global Uncertainties
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Gold Hits Record High on Global Uncertainties

Gold Hits Record High on Global Uncertainties

Gold prices surged to a record high on Wednesday, as conflicts in the Middle East and uncertainty surrounding the upcoming US election spurred demand for safe-haven assets.
Spot gold traded at $2,749.82 per ounce as of 0437 GMT, after hitting an all-time high of $2,750.21 earlier in the session, Reuters reported.
US gold futures edged 0.2% higher to $2,764.00.
"Both presidential candidates are proposing inflationary policies, which will be very supportive for gold. While some of this is priced in, it will also provide ongoing support for higher prices," Michael Langford, chief investment officer at Scorpion Minerals, said.
Bullion is considered a hedge against economic and geopolitical uncertainties.
Democratic US Vice President Kamala Harris held a marginal 46% to 43% lead over Republican former President Donald Trump, a new Reuters/Ipsos poll found.
In the Middle East, Israel confirmed it had killed Hashem Safieddine, the heir apparent to late Hezbollah leader Hassan Nasrallah who was killed last month.
Meanwhile, the US Federal Reserve started its rate-easing cycle with a 50-basis-point cut last month. The odds of a similar move in November have faded entirely, but traders see a 92% chance of a quarter-basis-point cut, the CME FedWatch tool showed. Lower rates improve the appeal of non-yielding bullion.
"Gold has scaled new highs despite real and nominal yields edging higher, the dollar strengthening and US equity markets scaling new highs," analysts at Standard Chartered said in a note.
"Gold’s ability to latch on to coat tails that take prices higher irrespective of the macro backdrop suggests that the market continues to see positive underlying flows."
Spot silver fell 0.5% to $34.67 per ounce, after hitting its highest since late 2012 at $34.87 in the previous session.
"Silver's physical shortages provide strong support for the metal," Langford said.
Platinum rose 0.5% at $1,033.88 and palladium added 0.3% to $1,078.72.

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Aramco Maintains $31 Billion in Dividends Despite Profit Decline

Aramco’s pavilion at the Global Future Investment Initiative conference held in Riyadh (FII webiste)
Aramco’s pavilion at the Global Future Investment Initiative conference held in Riyadh (FII webiste)
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Aramco Maintains $31 Billion in Dividends Despite Profit Decline

Aramco’s pavilion at the Global Future Investment Initiative conference held in Riyadh (FII webiste)
Aramco’s pavilion at the Global Future Investment Initiative conference held in Riyadh (FII webiste)

Saudi Aramco retained its position as the world’s top dividend distributor, maintaining its quarterly payouts at $31.05 billion, despite a 15.4% year-over-year drop in third-quarter net profit to $27.6 billion, surpassing analyst expectations of $26.3 billion. The profit decline was mainly attributed to lower crude oil prices and weaker margins in its chemicals segment, though partly offset by reduced production royalties, income tax, and zakat.

According to Aramco’s data, the average oil price during Q3 2023 was $79.3 per barrel, down 11.2% from $89.3 per barrel in Q3 2022. The company’s dividend distributions include $20.3 billion in base dividends and $10.8 billion in performance-linked payouts scheduled for Q4.

Aramco’s CEO, Amin Nasser, highlighted the company’s strong net income and free cash flow despite the lower oil prices. He affirmed Aramco’s commitment to maintaining positive momentum and strengthening its position as a global leader in energy and petrochemicals.

In remarks to Asharq Al-Awsat, Mohammed Al-Farraj, Senior Asset Management Officer at Arbah Financial, explained the 15.4% profit decline was driven by several factors, primarily lower crude oil prices, which directly affect Aramco’s revenue and profits. Additionally, the chemicals and refining businesses faced weak profit margins due to challenges like rising operational costs and a global demand slowdown. Economic factors such as inflation and higher interest rates also impacted energy demand, pressuring Aramco’s earnings.

Al-Farraj further noted that while oil price drops reduce Aramco’s revenue and impact refining margins, the chemicals sector faces additional challenges from higher raw material and energy costs, as well as intense competition. Despite these challenges, Aramco remains committed to its generous dividend policy, reflected in its substantial quarterly payout of $31.05 billion.

Aramco’s stock remained stable, trading at SAR27.55, up by about 0.2%. According to Al-Farraj, investor confidence in Aramco is bolstered by its financial strength and regular dividends, with strong growth prospects in renewable energy and petrochemical investments.

Energy researcher and OPEC Research Fellow Dr. Youssef Al-Shammari added that Aramco has become more resilient and less dependent on oil prices for profitability. He noted that Aramco’s financial and investment strategies make it less vulnerable to oil price fluctuations. Additionally, he pointed out a general decline in global refining margins due to weaker global demand.