Gold surged to a record high on Tuesday, buoyed by a weakening U.S. dollar and growing market anticipation ahead of the Federal Reserve’s policy meeting, where a 25-basis-point rate cut is widely expected.
Spot gold rose 0.6% to $3,701.93 per ounce after hitting a record high of $3,699.37 earlier in the session.
The dollar fell to a more than two-month low against rivals. A weaker greenback makes gold less expensive for other currency holders.
“Global growth uncertainty and geopolitical risk continue to keep haven demand high but the gold rally is being driven largely by anticipation of aggressive rate cuts from the Federal Reserve,” said Zain Vawda, analyst at MarketPulse by OANDA.
“If the dot plot shows a shift to two rate cuts in 2025, this could fuel the gold rally and push it beyond the $3,700/oz mark with $3,800/oz a real possibility.”
Traders are pricing in a near-certain 25 bps rate cut at the end of a two-day meeting on September 17, with a small chance of a 50-bps reduction, according to the CME FedWatch tool.
U.S. President Donald Trump in a social media post on Monday called for Fed Chair Jerome Powell to enact a “bigger” rate cut. Meanwhile, U.S. Senate narrowly confirmed Stephen Miran to the central bank’s board of governors.
Non-yielding bullion tends to do well in a low-interest rate environment.
Commerzbank raised its gold price forecast to $3,600 per troy ounce by the end of this year and to $3,800 by the end of 2026.
Bullion has surged about 41% this year and notched multiple record highs on the back of sustained central bank purchases, diversification away from the U.S. dollar, resilient safe-haven demand amid geopolitical and trade frictions.
Elsewhere, spot silver was up 0.2% at $42.81 per ounce, the highest level since September 2011. Platinum shed 0.3% to $1,397.02 and palladium fell 0.6% to $1,176.68.
Oil prices edged higher on Tuesday as markets weighed potential supply disruption from Russia after Ukrainian drone attacks on its refineries and the prospect of a U.S. central bank interest rate cut.
Brent crude futures rose 38 cents, or 0.56%, to $67.82 a barrel, while U.S. West Texas Intermediate crude was at $63.80, up 50 cents, or 0.79%. On Monday, Brent settled up 45 cents at $67.44 while WTI settled 61 cents higher at $63.30.
Ukraine has intensified attacks on Russia’s energy infrastructure in an attempt to impair Moscow’s war capability, as talks to end their conflict have stalled.
“An attack on an export terminal like Primorsk is aimed more at limiting Russia’s ability to sell its oil abroad, affecting export markets,” said JP Morgan analysts.
“More importantly, the attack suggests a growing willingness to disrupt international oil markets, which has the potential to add upside pressure on oil prices,” they said.
Goldman Sachs estimates that the Ukrainian attacks have taken out about 300,000 barrels per day of Russian refining capacity in August and so far this month.
“While the uncertainty around secondary tariffs and additional sanctions remains high, we assume only modestly lower Russian production as Asian buyers continue to signal willingness to import Russian crude,” the bank said.
U.S. Treasury Secretary Scott Bessent on Monday said the government would not impose additional tariffs on Chinese goods to encourage China to halt purchases of Russian oil unless European countries hit China and India, the biggest buyers of Russian crude, with duties of their own.
Also on investors’ radar is the U.S. Federal Reserve’s September 16-17 meeting, at which the bank is widely expected to cut interest rates.
While lower borrowing costs typically boost fuel demand, analysts were cautious on the health of the overall U.S. economy.
Markets were also factoring in the likelihood of crude inventory declines in the U.S. last week, with official data expected on Wednesday at 1430 GMT.
U.S. crude inventories likely fell 6.4 million barrels for the week ended September 12, following a 3.9 million build a week earlier, energy strategist Walt Chancellor at Macquarie Group said in a client note.
A Reuters poll on Monday showed analysts expected U.S. crude oil and gasoline stockpiles to have fallen last week, while distillate inventories likely rose.
Canada Mortgage and Housing Corp. says the annual pace of housing starts in August fell 16 per cent compared with July.
The national housing agency says the seasonally adjusted annual rate of housing starts came in at 245,791 units in August, down from 293,537 in July.
The drop came as the seasonally adjusted annual pace of housing starts for Canadian centres with a population of 10,000 or greater fell to 223,728 in August compared with 272,330 a month earlier.
The annual rate of rural starts was estimated at 22,063 in August.
The six-month moving average of the overall seasonally adjusted annual rate was up 1.6 per cent in August at 267,259 units.
CMHC says actual housing starts in August for centres with a population of 10,000 or greater totalled 18,408, compared with 16,775 in August 2024.
Industry Minister Mélanie Joly says that promises made by Anglo American PLC NGLOY +0.68%increase as part of its attempt to buy Teck Resources Ltd. TECK-B-T -3.32%decrease don’t go far enough.
London-based Anglo has made a slew of commitments to win approval from Ottawa for the US$20-billion deal, including moving its global headquarters to Canada and changing its name to Anglo Teck.
The deal can’t proceed unless Ms. Joly deems it to be of net economic benefit to Canada and determines that there are no national security concerns.
Speaking to reporters on Tuesday in Ottawa, Ms. Joly said Anglo must go further to prove the deal is of benefit to Canada.
“I think right now that it’s not enough, and also we need to think about longer term, and how can we make sure that ultimately we create jobs, but we have a strong headquarters, not only now, but also for the next decades,” she said.
“We need to have further conversations with the companies.”
Ms. Joly said that she will be meeting with the CEOs of both Anglo and Teck next week.
Discussions have already taken place between the government and the companies about the deal.
Mr. Carney also made it clear that any other potential bidders for Teck would also have to commit to moving to Canada, a stipulation that dampens the prospect for a bidding war for the Canadian miner.
Anglo must curry favour with Ottawa in the face of an extremely high bar set by the government for allowing takeovers in the critical minerals sector.
Last year, Ottawa after approving Glencore PLC’s acquisition of a majority stake in Teck’s coal business, then-industry minister François-Philippe Champagne said Canada would approve foreign acquisitions of big Canadian critical minerals companies only “in the most exceptional of circumstances.”
Ottawa changed the rules in a climate of extreme anxiety that Canada was slipping behind its global rivals in critical minerals such as copper, lithium, and cobalt.
After Teck sold its coal business it had ambitions to be a global player in copper, one of several critical minerals used in low carbon energy. But its plans have been derailed by massive cost overruns and engineering problems at its biggest copper mine in Chile.
Anglo is making its play for Teck during a time when the Canadian miner’s stock was badly beaten up owing to challenges at the mine.
One of Anglo’s other commitments is moving many of its high-ranking personnel to Canada. Its chief executive officer, deputy CEO, chief financial officer and “a significant majority” of the executive management team will be based in Canada, the company said. In addition, “a substantial proportion” of the board will be Canadian.
Anglo also said it plans to invest at least $4.5-billion over five years in Canada, including putting some of that toward an extension of the Highland Valley mine, improving critical-minerals processing capacity at the Trail plant in British Columbia, and potentially building new mines. Many of those investments had already been announced by Teck before the deal was announced.
Given that Mr. Carney won election on a pledge to protect the domestic economy in the face of a U.S. trade war, allowing the sale of a Canadian mining giant to a foreign multinational could be seen as an abdication of that promise.
Teck is one of the last remaining big Canadian critical minerals companies left in Canada. Over the decades, many former Canadian mining champions, including Alcan Inc., Falconbridge Ltd., and Inco Ltd. have been sold to foreign mining companies.
Bay street veteran Tom Caldwell, chairman of Caldwell Securities Ltd. said that potentially losing Teck is painful for the already hollowed out Canadian mining sector and the framing of the deal by the companies as a “merger of equals” is a fallacy.
“Mergers do not exist. There’s only takeovers,” he said.
“I’ve been through kazillions of them in my career, and there’s always a dominant player. And we know who that is.”
If the deal with Anglo closes, Teck shareholders will own 37.6 per cent of Anglo Teck, while Anglo shareholders will own 62.4 per cent.
Anglo Teck will remain domiciled in Britain and the primary stock listing will be the London Stock Exchange.
Canada’s inflation rate rose to 1.9 per cent in August, increasing by less than economists had forecasted and solidifying expectations of an interest rate cut on Wednesday.
Statistics Canada reported on Tuesday that the annual inflation rate rose from 1.7 per cent in July. The acceleration in headline inflation was driven by a smaller annual increase in gasoline prices in August relative to July.
The Bank of Canada will have a close eye on Tuesday’s consumer price index report as it gears up for its interest rate announcement on Wednesday. Economists widely expect the central bank will resume cutting interest rates as U.S. tariffs slow economic growth.
CIBC senior economist Andrew Grantham said, “inflation remains unthreatening,” noting that core measures of inflation which strip out volatility in price movements have decelerated slightly.
“So all in all, really, this is not an obstacle for the Bank of Canada to cut interest rates tomorrow, and we continue to forecast a 25-basis-point move,” he said in an interview.
The Bank of Canada’s key measures of inflation continued to hover around three per cent last month. Meanwhile, inflation excluding gasoline prices rose by 2.4 per cent, down slightly from the previous three months.
Mr. Grantham expects the central bank to deliver another interest rate cut in October, as well.
The Bank of Canada’s key interest rate currently stands at 2.75 per cent.
Traders now see about a 93-per-cent chance of a quarter-percentage-point cut on Wednesday, up from about 87 per cent prior to the inflation report, according to LSEG data.
The Bank of Canada has held off on cutting interest rates since March, opting to monitor how the U.S. trade war evolves and whether inflation remains at bay.
Economists were somewhat concerned by a pick-up in inflation in the spring and the prospect of a trade war raising prices further. But those anxieties have faded as data come in milder than expected.
Mr. Grantham said that in hindsight, the pick-up in inflation in the spring was being driven by retaliatory tariffs Canada placed on U.S. goods, which affected food products in particular.
Prime Minister Mark Carney dropped many of Canada’s retaliatory tariffs this month, in a bid to further trade negotiations with the U.S.
“It’s very difficult to make the case that underlying inflationary pressures are anything but weak at the moment,” said Royce Mendes, managing director and head of macro strategy at Desjardins.
“That’s even more true given the fact that Canada’s retaliatory tariffs have mostly been eliminated, so any price increases that were due to those tariffs are likely to normalize, and in some cases, we could even see price declines in some categories.”
While headline inflation remained around the Bank of Canada’s two-per-cent target, Canadians continued to see the cost of food and shelter rise faster than overall price growth last month.
Food prices rose by 3.4 per cent, compared with 3.3 per cent in July. Shelter costs increased at a slower pace of 2.6 per cent, down from 3 per cent the previous month.
China retail sales, industrial production and fixed asset investment
Euro zone trade surplus
(8:30 a.m. ET) Canada’s manufacturing sales and new orders for July. Estimates are month-over-month gains of 1.8 per cent and 2.0 per cent, respectively.
(8:30 a.m. ET) Canadian wholesale trade for July. Estimate is a rise of 1.3 per cent from June.
(8:30 a.m. ET) Canadian new motor vehicle sales for July. Estimate is a year-over-year increase of 6.5 per cent.
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for September.
(9 a.m. ET) Canada’s existing home sales and average prices for August. Estimates are rises of 2.0 per cent and 1.0 per cent year-over-year, respectively.
(9 a.m. ET) Canada’s MLS Home Price Index for August. Estimate is a decline of 3.5 per cent year-over-year.
–
Tuesday September 16
Euro zone labour costs and industrial production
(8:15 a.m. ET) Canadian housing starts for August. Estimate is an annualized rate decline of 3.1 per cent.
(8:30 a.m. ET) Canadian CPI for August. The Street is projecting an increase of 0.1 per cent from July and up 2.0 per cent year-over-year.
(8:30 a.m. ET) U.S. retail sales for August. Consensus is a rise of 0.2 per cent from July.
(8:30 a.m. ET) U.S. import prices for August. Estimate is a decline of 0.3 per cent from July and a 0.2-per-cent drop year-over-year.
(9:15 a.m. ET) U.S. industrial production and capacity utilization for August.
(10 a.m. ET) U.S. NAHB Housing Market Index for September.
Barrick Mining Corp. ABX-T -1.74%decrease is selling Hemlo, its only Canadian mine, to Carcetti Capital Corp. CART-H-X +2.50%increase for up to US$1.09-billion.
Toronto-based Barrick put Hemlo up for sale earlier in the year, deeming it a “non-core” asset.
Carcetti will pay Barrick US$875-million, and US$50-million in its shares upfront. Additionally, Barrick stands to receive up to US$165-million contingent on production from the mine and the price of gold over a five-year period.
Fahad Tariq, an analyst with Jefferies, said in a note to clients that Barrick is selling at an attractive valuation and that stock buybacks from the Hemlo sale make sense given that its shares trade at a steep discount to its peers.
Barrick announced the Hemlo sale days after Canada’s Teck Resources Ltd. TECK-B-T +1.34%increase agreed to a takeover by Britain’s Anglo American PLC. NGLOY -1.67%decrease for roughly US$20-billion. Some market watchers have speculated that Barrick could launch a rival proposal for Teck. London-based Anglo is not paying a premium for Teck, leaving an opportunity for other bids to surface.
Barrick has made no secret of its desire to grow its copper business. The company recently changed the name of the company from Barrick Gold to Barrick Mining as a reflection of its increased focus on copper. Barrick already operates copper mines in Zambia and Saudi Arabia, and it has started construction on a gigantic new copper and gold mine in Pakistan.
The world’s biggest gold miners are streamlining their portfolios to zero in on their biggest and most profitable operations, and cashing out during a time of record high gold prices.
Late last year, Denver-based Newmont Corp. NGT-T -0.62%decrease, the world’s biggest gold miner, sold its Musselwhite mine in Ontario to Vancouver-based Orla Mining Ltd. NGT-T -0.62%decrease for around US$850-million.
Carcetti Capital plans to change its name to Hemlo Mining Corp. after the transaction with Barrick closes. Its management and board includes former Teck geologist Robert Quartermain. Later in his career, he founded gold miner Pretium Resources Inc., which was acquired by Australia’s Newcrest Mining Ltd. He was also previously the CEO of SSR Mining Inc.
The consumer price index posted a seasonally adjusted 0.4% increase for the month, the biggest gain since January, putting the annual inflation rate at 2.9%.
The Labor Department reported a surprise increase in weekly unemployment compensation filings to a seasonally adjusted 263,000, the highest since October 2021.
The reports provide the final pieces of a complicated data puzzle that central bankers will review at their two-day policy meeting that concludes Sept. 17.
ck Resources Ltd. TECK-B-T +11.53%increase has agreed to be acquired by British mining giant Anglo American PLC NGLOY +10.87%increase in a deal that could result in one of the last remaining Canadian major critical minerals miners being swallowed up by a foreign buyer.
Vancouver-based Teck on Tuesday said it had reached a friendly deal to be acquired by London-based Anglo in an all-stock transaction.
Under the deal, Teck’s shareholders will receive 1.3301 shares of Anglo in exchange for their securities, which equates to an “at the market” deal, meaning no premium is being paid by Anglo.
The new company will be renamed Anglo Teck, will be worth about $50-billion and will become the world’s fifth-largest copper producer. Anglo shareholders will end up owning 62.4 per cent of the company and Teck shareholders will own 37.6 per cent.
What Anglo American brings is further world class copper assets, as well as some very high quality iron ore, in combination with the zinc that we have in the portfolio,” said Jonathan Price, CEO of Teck, in an interview.
“What we’re creating here is a very large and very high quality copper-focused mining company.”
For the deal to close it must first be approved by the federal government. Ottawa will scrutinize the transaction to make sure there are no national-security concerns, and it must make economic sense for Canada under the net benefit test.
With Teck potentially falling into foreign hands, Canada’s influence and power in the global critical minerals industry appear to be fading ata time when politicians of all stripes have called for this country to build up its homegrown industries to fight a vicious trade war with the U.S.
Critical minerals are used in a wide range of technologies, including electric vehicles, fighter jets, wind turbines and consumer electronics.
Over the past few decades, many of Canada’s biggest mining champions have been acquired by foreign buyers, including Alcan Inc., Falconbridge Ltd., Noranda Inc. and Inco Ltd.
Pierre Lassonde, co-founder of Franco-Nevada Corp. FNV-T -0.26%decrease, the world’s biggest mining royalty company, said in an interview thatthe sale of Teck is a tragedy for the Canadian mining industry, but one that is largely of Teck’s making, owing to its poor execution over many years.
“I think that Jonathan Price should be nominated to the Canadian Mining Hall of Shame, and the entire board of Teck should join him,” he said.
Teck is selling the company during a period of significant operational weakness and share price underperformance, driven by the poor execution at its giant Quebrada Blanca copper mine in Chile, also known as QB2.
Teck CEO Jonathan Price says the deal would create ‘a very large and very high quality copper-focused mining company.’Marcos Zegers/The Globe and Mail
Teck put the high-altitude mine in the mountains of northern Chile into production in 2023. But the US$8.7-billion project went 85 per cent over budget, and it has struggled with grade shortfalls, production misses, cuts to guidance and persistent drainage issues at its tailings dam.
Anglo on paper has a better shot of making QB2 work than Teck on its own. The British company owns 44 per cent of the nearby Collahuasi mine, and it will attempt to combine the two operations. That is expected to add US$1.4-billion a year to earnings,the companies said on Tuesday, including the ability to process high-grade ore from Collahuassi at QB2’s newly constructed plant.
This isn’t the first time a foreign buyer has targeted Teck, but the Canadian miner has much less ability to defend itself this time.
Teck’s history goes back to 1913, when Hughes Gold Mines Ltd. started a gold mine in Teck Township on the shores of Kirkland Lake, Ont. TheKeevil familyhas been involved in the company since the 1950s. Norman B. Keevil, now in his late 80s, is one of Teck’s controlling shareholders.
Two years ago, when another foreign mining company, Glencore PLC GLCNF +5.58%increase of Switzerland, tried to buy Teck, Mr. Keevil refused to sell, famously telling The Globe and Mail that “Canada is not for sale.”
But he has no such objections this time around. He told The Globe on Tuesday that he will usehis super voting A shares in support of the takeover, and that Anglo’s scale will help Teck enormously.
“It makes us both better companies,” he said. “Teck’s future is secured. It will become more resilient.”
If Anglo succeeds in buying Teck, Anglo’s CEO, Duncan Wanblad, who was born in South Africa, will become the CEO of Anglo Teck. Mr. Price, a Briton who became Teck’s CEO in 2022, will become the deputy CEO. The operational headquarters of the company will be in Vancouver, where both executives, along with the senior management teams, will be based.
If Ottawa allows the deal to proceed, it will be making an exception to its own policies around foreign ownership of Canadian critical minerals assets. Ottawa in 2023 tightened its already stringent rules, saying it would allow acquisitions of large Canadian critical minerals companies only under the most exceptional circumstances.
In a statement on X on Tuesday, Industry Minister Mélanie Joly said that “any new investments must support our core mission of building one economy in the best interests of Canadians.”
Teck does not appear to have shopped the company widely before agreeing to the takeover by Anglo, which opens the company up to competing bids from other suitors.
When asked in the interview whether Teck ran an auction for the company, Mr. Price signalled that the company focused its efforts on getting a deal done with Anglo.
Tyler Tebbs, founder of event-driven research firm Tebbs Capital, said in an interview that Teck could see competing bids from Vale SA VALE-N -0.96%decrease, Freeport-McMoRan FCX-N -5.94%decrease, or BHP Group Ltd BHPLF +2.05%increase, whose technical and engineering skills he rates highly.
“QB2 is an engineering debacle,” he said. “Having BHP would be great.”
Mr. Tebbs said Glencore, which is a part owner of Collahuasi alongside Anglo, may also try again to buy Teck.
While Glencore a few years ago failed in its attempt to acquire all of Teck, it ended up acquiring a majority stake in Teck’s legacy coal business.
Anglo didn’t consult with Glencore before launching its Teck takeover proposal and Mr. Wanblad in an interview acknowledged that he has no idea whether the Swiss miner might still have ambitions to buy Teck.
