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Geopolitical Uncertainty Drives Gold Prices Higher Despite Fed Rate Cut Concerns

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As tensions simmer in the Middle East and concerns loom over Federal Reserve policy, gold continues its upward trajectory, defying expectations and reinforcing its status as the ultimate safe-haven asset.

The latest surge in gold prices comes amidst escalating geopolitical tensions in the Middle East.

Reports suggest that the United States and its allies are bracing for potential missile or drone strikes by Iran or its proxies on military and government targets in Israel. Such a significant escalation in the six-month-old conflict has sent shockwaves through financial markets, prompting investors to seek refuge in gold.

Despite initial setbacks earlier in the week, gold resumed its blistering rally, buoyed by the specter of geopolitical uncertainty.

On Wednesday, the precious metal witnessed its most significant decline in almost a month following a hotter-than-expected US inflation readout.

This unexpected data led traders to recalibrate their expectations for Federal Reserve interest rate cuts this year, causing the yield on 10-year Treasuries to surge above 4.5%.

However, gold’s resilience in the face of shifting market dynamics remains remarkable. Even as concerns mount over the Fed’s rate-cutting trajectory, the allure of gold as a safe-haven asset persists.

Prices hover just shy of a record high reached earlier in the week, propelled by robust buying from central banks.

Market analysts interviewed by Bloomberg anticipate further gains in gold prices, citing continued geopolitical tensions and strong momentum in the market.

The precious metal’s near-20% rally since mid-February underscores its enduring appeal as a hedge against uncertainty and inflationary pressures.

At 9:54 a.m. in Singapore, spot gold rose 0.3% to $2,341.58 an ounce, signaling continued investor confidence in the metal’s resilience.

The Bloomberg Dollar Spot Index, meanwhile, remained relatively unchanged near its highest level since November.

Silver, often considered a bellwether for precious metals, held steady after reaching a three-year high, while platinum and palladium also registered gains.

As the world navigates through a complex web of geopolitical tensions and economic uncertainties, gold remains a beacon of stability in an increasingly volatile landscape.

Its ability to weather market fluctuations and maintain its allure as a safe-haven asset reaffirms its timeless appeal to investors seeking refuge amidst uncertainty.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Commodities

Cooking Gas Prices Surge Amidst Import Reliance, NIPCO CEO Calls for Local Refinery Support

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cooking gas cylinder

Just like the surge in fuel pump prices, the price of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, has increased.

The Managing Director/Chief Executive Officer of the Nigerian Independent Petroleum Company (NIPCO) Plc, Suresh Kumar, has urged the Federal Government to encourage Dangote Refinery and other domestic refineries to produce LPG to help lower the soaring price of cooking gas.

According to experts, the increase in cooking gas prices was due to insufficient local production.

Meanwhile, at the recently concluded National Conference of the Nigerian Association of Liquefied Petroleum Gas Marketers 2024, held in Lagos, Kumar revealed that over 60 percent of the cooking gas consumed in Nigeria is imported, which is a major factor behind the price hike.

Kumar acknowledged that support for local refineries would boost cooking gas production and reduce LPG importation.

“There is hope that reliance on imported LPG will decrease, which will positively influence domestic prices. Greater local production will make LPG more affordable since it reduces exposure to foreign exchange fluctuations and international pricing dynamics,” he stated.

Kumar further noted that the Federal Government should provide financial aid by investing in local refineries to accelerate LPG production, meet public demand with adequate supply, and reduce costs.

“We must work with the Nigerian Midstream and Downstream Petroleum Regulatory Authority and other stakeholders to end gas flaring in the country. Substantial investments are needed to capture and process flared gas to increase domestic supply beyond the current 1.5 million MT to at least 5 million MT annually,” he reiterated.

As of the time of this report, Investors King gathered that in the Osogbo area of Osun State, the price has risen from N1,400 to N1,500. In Ilorin, Kwara State, it is currently being sold for N1,500.

Meanwhile, in Lagos State, the current price is N1,400, compared to the previous price of N1,300.

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Federal Government Expands Subsidized Rice Program to Lagos, Kano, and Borno

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Rice mill

The Federal Government has announced that Lagos, Kano, and Borno will be the next states that will benefit from its subsidized rice program aimed at addressing economic hardship in the country.

The initiative aims to sell a 50kg bag of rice for ₦40,000.

According to a director at the Federal Ministry of Agriculture and Food Security, plans are already underway to roll out the food subsidy program in these states.

Investors King learned that since the launch of the subsidized rice program in September, only civil servants in Abuja, the Federal Capital Territory (FCT), have benefited from it.

However, the director revealed that the government is ready for the next phase of the program, which will help address growing food insecurity in Nigeria.

The source disclosed that the next phase, set to begin shortly, is part of a broader strategy by President Tinubu’s administration to ensure that no Nigerian goes to bed hungry.

The official also dismissed reports that the sale of subsidized rice has been suspended in Abuja, clarifying that the intervention is still in its early stages.

According to him, while the ministry is actively coordinating with other states, sales are ongoing in Abuja.

“As I speak to you now, we are about to activate sales in Lagos and Kano states, with Borno State also set to be addressed,” the agriculture ministry official stated.

“We’ve barely started; how can we stop? Sales are ongoing, and we are actively engaging with other states,” he added.

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Osun Government Seals Off Gold Mining Company For Allegedly Evading Tax 

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mining sector

The Osun State Government said it has sealed up the business premises of Segilola Resources Operating Limited over alleged tax evasion.

A statement by the state Commissioner for Information and Public Enlightenment, Kolapo Alimi, on Monday, said the action followed a court order permitting the state to seal the company for “various flagrant tax violations and failure to disclose fully the employees directly and indirectly involved in its business activities, obstruction of tax processes by failing to provide timely tax information and documents.”

“Segilola Resources Operating Limited is one of the major companies carrying out mining activities and mineral exploration in the State as a subsidiary of Thors Explorations Limited listed on London and Toronto Stock Exchanges.

“After a series of demands, meetings, consultations, and engagements, the company still remained adamant and remorseless in its tax evasion and other violations. The Attorney-General of Osun State approached the court and consequently obtained an Order of the Court to seal up the Company until the due sum calculated from 2019 to 2023 is fully liquidated into the Osun State Government Account.

“The state notes with regret that while some companies make billions of naira in the state, especially in the mining sector, they are not ready to give the state its lawful dues.

“While the issue of shareholding values due to the acquisition of Osun state interest in Tropical Mines is purely commercial, we will continue to hold the company responsible for all its actions,” he said.

Recall that the gold mining company, in a statement by its Country Manager, Austin Menegbo, had denied the allegations by the state government, claiming that it has consistently demonstrated a commitment to being a law-abiding, transparent corporate entity, fulfilling all tax obligations and royalty payments in full and on time.

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