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Gold prices rise as US-China trade tensions persist and investors watch inflation data
The gold price edged up on Wednesday, as investors awaited key U.S. Inflation data to determine the direction of the market. As of 0153 GMT, spot gold was up 0.2% at $3,328.89 per ounce. U.S. Gold Futures rose 0.2% to $3349.80. U.S. officials and Chinese officials have agreed on a framework for re-establishing their trade truce and resolving China's export limitations on rare earth minerals, magnets and other materials. This was announced by U.S. Secretary of Commerce Howard Lutnick on Tuesday after two days of intensive negotiations in London. Lutnick stated that the U.S. delegation plans to present the framework for President Donald Trump's approval before implementation. The Chinese delegation will also seek President Xi Jinping's endorsement. "We know the U.S.-China negotiators are in agreement on a framework,' but uncertainty lingers until Trump or Xi give their approval. This uncertainty is causing gold to rise in the inflation figures, said Matt Simpson a senior analyst with City Index. In April, the U.S. imposed tariffs on China that were tit for tat. This sparked a trade conflict. Both nations agreed, following talks held in Geneva last week, to reduce tariffs from triple-digit levels. The World Bank slashed Tuesday its global growth projection for 2025 to 2.3% from 4.10 percent, citing higher tariffs and increased uncertainty as a "significant headwind". Investors could get more information on the U.S. Federal Reserve policy direction from the U.S. Consumer Price Index (CPI) due at 1230 GMT. Most economists polled believe that the Federal Reserve will hold interest rates for a couple more months. This is because there are still risks of inflation resurging due to Trump's policies. Palladium rose 0.3%, to $1063.62, while platinum was down 0.4% at $1216.42. (Reporting and editing by Harikrishnan Nair, Alan Barona, and Anmol Choubey from Bengaluru)
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London copper market little changed as it awaits US-China Trade Talk details
London copper prices were virtually flat on Wednesday as investors awaited more details following the latest signs that progress had been made in U.S. China trade talks. U.S. officials and Chinese officials have agreed on a framework for re-establishing their trade truce and resolving China's export limitations on rare earth minerals, magnets and other materials. This was announced by U.S. Secretary of Commerce Howard Lutnick on Tuesday after two days of intensive negotiations in London. The London Metal Exchange's three-month contract for copper fell just $2 per ton, to $9,754.5, by 0105 GMT. Meanwhile, the Shanghai Futures Exchange's most traded copper contract remained unchanged at 79130 yuan ($11,010.16). After the talks, the dollar remained steady in comparison to its major counterparts. Carol Kong, currency analyst at Commonwealth Bank of Australia said, "It's going to be a very long time before both sides can reach a comprehensive agreement." "This type of comprehensive deal is usually reached over years, so I am sceptical that the framework agreed upon at the London meeting will be comprehensive." Aluminium gained 0.3%, to $2,499.5 per ton. Lead gained 0.2%, to $1,985.5. Nickel gained 0.1%, to $15,325. Zinc gained 0.2%, to 21,915 Yuan. Nickel fell by 0.2%, to 121370 Yuan. Lead eased by 0.1%, to 16,835 Yuan. Click or to see the latest news in metals, and other related stories. DATA/EVENTS 1230 US Core Consumer Price Index MM, SA, YY; NSA, May 1230 US Core Consumer Price Index MM; SA; YY; May 1230 US Wage Earner May ($1 = 7,1870 Chinese yuan); (Reporting and Editing by Sonia Cheema).
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Markets assess the outcome of US-China trade talks by lowering oil prices
The oil prices dropped in the early hours of Wednesday's trade as the markets assessed the outcome U.S. - China trade talks that President Donald Trump has yet to review. Weak Chinese demand for oil and OPEC+ increased production were also weighing on the market. Brent crude futures fell 24 cents or 0.36% to trade at $66.63 per barrel. U.S. West Texas intermediate crude dropped 21 cents or 0.32% to $64.77 as of 0119 GMT. U.S. officials and Chinese officials have agreed on a framework for re-establishing their trade truce and resolving China's export limitations on rare earth minerals, magnets and other materials. This was announced by U.S. Secretary of Commerce Howard Lutnick on Tuesday after two days of intensive negotiations in London. Lutnick said that Trump would be informed of the results before giving his approval. Tony Sycamore is a market analyst at IG. He said, "I think that it will remove some downside risks for crude oil. This includes the Chinese economy, and it will stabilize the U.S. economic ship. Both of these should support crude oil demand and price." The oil import data released by China this week, as well as the ongoing production increases of OPEC+ (which includes the Organization of the Petroleum Exporting Countries, and its allies, such Russia), have contributed to the decline. OPEC+ will increase its oil production in July by 411,000 barrels a day as it attempts to undo production cuts for the fourth consecutive month. China's Customs data revealed this week that the world's largest oil importer imported 46.60 millions tonnes of crude in May. This is down 3% compared to the previous month. Imports of oil-related products also fell by 12.9%. The Energy Information Administration (the statistical arm of U.S. Department of Energy) will release its weekly report on U.S. crude oil inventories on Wednesday. According to analysts polled, U.S. crude stockpiles are expected to fall by 2,000,000 barrels during the week ending June 6, but distillate and gasoline stocks will likely rise. They estimate a greater decline in crude stock than the American Petroleum Institute. Sources said under condition of anonymity that the API reported Tuesday that crude stock fell by 370,000 barrels in the last week.
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Analysts' reactions to the US-China Trade Agreement
U.S. commerce secretary Howard Lutnick stated that restrictions on magnets and rare earths should be resolved as a result of a framework for trade and implementation plan reached with China in London. Li Chenggang, Vice Minister of Commerce in China, said that the two teams agreed to implement their Geneva consensus. They would then take the framework agreed upon back to their respective leaders. QUOTES: CHRIS WESTON HEAD OF RESEARCH PEPPERSTONE MELBOURNE The devil is in the detail, but the lack reaction indicates that this outcome was fully expected. The Geneva agreement is a good thing, but the fact that there was no reaction on S&P500 Futures and only small movements in CNH and AUD suggests the outcome was expected. Details matter, particularly the amount of rare earths going to the US and the freedom of US chips to go East. But for now, as long as headlines about the talks between the parties are positive, risk assets will be supported. The reaction of Chinese equity markets could be telling, and I suspect US equity Futures will closely track the developments today. CAROL KONG CURRENCY STRATEGIST, COMMONWEALTH BBANK OF AUSTRALIAN, SYDNEY "I believe in this climate...any hints of progress on a possible trade agreement will be beneficial for the markets. Although details are scarce, as long the two parties are in communication, I believe markets will be happy. "It's going to be hard for both sides and take a very long time before they can reach a comprehensive agreement." This type of comprehensive agreement usually takes years to reach, so I am skeptical that the framework agreed upon at the London meeting will be comprehensive. "Tensions may have de-escalated temporarily, but will escalate in the coming months." RAY ATTRILL HEAD OF FOREX STRATEGY, NATIONAL AUSTRALIA BANK SYDNEY "The devil will be in the detail of what I call a handshake deal and, more importantly, if this can help to reestablish the trust between President Xi, and President Trump which was clearly broken since the Geneva Agreement has been published. It's too early to declare that a new US-China trading agreement is imminent. "The entire year was littered by positive omens of reaching agreements, but we haven't seen any real progress. Or we've seen a backsliding in things that seemed to be agreed. "Our view remains that, whatever is agreed upon in the next few weeks and months, we will end up with an international tariff situation that is much worse than it was before Trump became president. We'll still have a tariff climate that we believe is detrimental to global growth." TONY SYCAMORE MARKET ANALYST IG SYDNEY If we maintain the terms of the Geneva Agreement we will see US tariffs for Chinese goods remaining at 30% for some time, and Chinese tariffs for US goods remaining at 10%. This is a reduction from 145% and 125%, respectively. This would be amazing. "Now, that was for me probably the consensus of the market...and now, people are just trying to figure out whether or not they're going to buy or sell US dollars and I think that reflects a little bit of this indecision. I thought that Geneva would be extended and it appears we are getting what I expected. This is why the U.S. equity market has held up at this time. They still seem overheated and need to take a step back. We've had a great run, and now we're pushing up against our February record highs. For me, I think it's a good idea for them to take some time off. It hasn't been above or below expectations. It's exactly where I expected we would land, and that's the reason I think there's now a bit of uncertainty in US equity futures."
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Analysts' reactions to the US-China Trade Agreement
U.S. commerce secretary Howard Lutnick stated that restrictions on magnets and rare earths should be resolved as a result of a framework for trade and implementation plan reached with China in London. Li Chenggang, Vice Minister of Commerce in China, said that the two teams agreed to implement their Geneva consensus. They would then take the framework agreed upon back to their respective leaders. QUOTES: CHRIS WESTON HEAD OF RESEARCH PEPPERSTONE MELBOURNE The devil is in the detail, but the lack reaction indicates that this outcome was fully expected. The Geneva agreement is a good thing, but the fact that there was no reaction on S&P500 Futures and only small movements in CNH and AUD suggests the outcome was expected. Details matter, particularly the amount of rare earths going to the US and the freedom of US chips to go East. But for now, as long as headlines about the talks between the parties are positive, risk assets will be supported. The reaction of Chinese equity markets could be telling, and I suspect US equity Futures will closely track the developments today."
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Sources say that US and Mexico have discussed a deal to reduce Trump's steel tariffs.
Sources in the industry and trade said that on Tuesday, the United States and Mexico were negotiating an agreement to reduce or eliminate President Donald Trump’s 50% tariffs on steel imports up until a certain amount. A source in the industry familiar with the discussions said that the likely outcome was a quota agreement, where a certain volume of imports from Mexico would enter duty-free or at a discounted rate and that any imports over that level would face the full 50% tariff. Source: It is unclear whether the agreement will eliminate tariffs for steel import volumes within the quota from Mexico, or if it will reduce them to a lesser level. Source: The exact volume of the quota has not been determined. Bloomberg News reported first on the negotiations for tariff reductions in Mexican steel. They cited people who were familiar with the issue as saying the two sides are close to an agreement. The report stated that the terms of the deal had not yet been finalized, but that U.S. steel imports would be tariff-free if total shipments were kept below a certain level based on historic trade volumes. A spokesperson from the White House declined to comment. Meanwhile, a spokesperson from the Commerce Department that administers Trump’s “Section 232” national security tariffs for steel and aluminum didn't respond to a comment request. According to data compiled by American Iron and Steel Institute from the U.S. Census Bureau, Mexico was the third-largest source of U.S. imports of steel in 2024. The total amount imported dropped 16% compared to the 4,18 million tons in 2024. In 2024, Canada will be the world's largest steel exporter with 6.56 million tons of net production. Brazil is second at 4.5 millions. Mexico and Canada received exemptions from the steel tariffs when Trump first implemented them in 2018. Special procedures were used to curb any import surges that exceeded historical volumes. These measures did not include a formal quota system like that of Brazil. Trump cancelled all steel and aluminium quotas, exclusions and exemptions in April, to increase the metals tariffs. Second trade source said that officials from the industry were pushing for a clearly-defined steel quota for Mexico due to past import surges. U.S. officials are trying to stop the transshipment from China and other third-country countries to the United States via Mexico. At a morning press conference, Mexican Economy Minister Marcelo Ebrard informed reporters that his government had told U.S. officials the tariffs are unjustified. He noted that the United States has a surplus in trade with Mexico for steel and aluminum. "Putting a tax on a product that you have an excess is debatable, because the goal of the tariff is reducing the deficit," added he. Ebrard stated that countries such as the UK were exempted of similar measures, and encouraged the U.S.A. to do the exact same thing with Mexico. He warned that the tariffs could harm jobs and supply chains due to their economic interdependence. Reporting by Ryan Patrick Jones, Natalia Siniawski and David Lawder from Mexico City and Chicago; editing by Sonali Paul
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US firms launch ETFs to take advantage of Trump's deregulation drive
The partners of the venture announced on Tuesday that a group of three investment firms has teamed up to create an exchange-traded funds (ETF) which will invest in companies in which they believe deregulation and the free market in capital markets will benefit. The Free Markets ETF began trading on NYSE on February 2. It will invest in companies of any size and in any industry that its managers believe are likely to profit from President Donald Trump's second administration's pursuit of deregulation. Hal Lambert, the founder of Point Bridge Capital (one of three firms managing the ETF portfolio), said, "I began thinking about this when the Supreme Court overturned its Chevron doctrine last summer." In June 2024 the Supreme Court ruled 6 to 3 to overturn an 1984 decision which had given regulatory agencies wide latitude in interpreting laws that they administered. Lambert said that Trump's victory (in the election) would allow for this process of deregulation to proceed even faster. Lambert contacted Todd Stankiewicz, SYKON Asset Management's Todd Stankiewicz and Michael Gayed of Tactical Rotation Management after the election to work on the ETF. They partnered up with Tidal Investments. This "white label" ETF issuing company provides the platform, operational support and other companies can launch their own ETFs. Gayed said that there was no other product that focused on deregulation. The portfolio will include bitcoin, gold, and shares of companies that are likely to gain from deregulation. These range from small financial firms to nuclear energy. The largest stakes are in Uranium, Robinhood Markets, and Old National Bancorp. Gayed said that this is not about politics, but rather profits. He added, however, that he believes the current U.S. politic trends will translate into profits for ETF portfolio.
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Cenovus CEO: Despite Trump's remarks, US oil is dependent on Canadian sources,
Cenovus Energy's CEO stated on Tuesday that the U.S. is dependent on Canadian oil imports despite Donald Trump's comments to this effect. Trump has repeatedly threatened to impose tariffs on Canada’s oil. Nearly 4 million barrels of Canadian oil are exported daily to the United States. Canada is the fourth largest oil producer in the world, and also ranks fifth for natural gas production. Trump said previously that the U.S. doesn't need to import oil and gas from Canada. Mark Carney, Canada's minority prime minister who was elected in April as a result of anti-Trump voter sentiments, said that the old relationship between Canada and the U.S., based on an increasing level of economic integration, is over. Jon McKenzie is the CEO of oil sands firm Cenovus, and the chair of the Canadian Association of Petroleum Producers. He said that trade tensions have brought to light the need for Canada's exports to be more diverse. He said the need to have energy in both countries is not negated by the fact that they are interdependent. What hasn't altered is energy economics or energy physics. McKenzie, speaking at a Calgary energy conference, said: "The reality is that we are hardwired to the U.S. System." The vast majority of Canada's oil exports are purchased by U.S. refining plants, which are located in the Midwest. These refineries can process crude produced by Canada. McKenzie stated that Canada can grow its oil production in the next decade. He added that the new government must recognize Canada's dependence on the U.S., and work to improve the relationship. He said: "We must act intelligently and not viscerally in the face of threats, but rather act intelligently for our long-term interests." Carney, as part of Canada's response to the U.S. threat of tariffs, has pledged that he will identify and accelerate projects of national importance aimed at helping Canada to become what he describes as a conventional and a clean energy superpower. McKenzie stated that the oil and gas industry does not want to see the federal government pick winners and losers when it comes to deciding which projects are to be fast tracked. He said that the industry wants to see a broad regulatory reform to remove barriers to investment in oil and natural gas projects. (Reporting and editing by Chris Reese, Rod Nickel and Amanda Stephenson from Calgary)
Investors expect US-China trade talks to progress as they increase the dollar value of stocks
The dollar and global stocks both edged up on Tuesday, as the United States and China are set to continue their trade talks for a second consecutive day. This gives investors reason to believe that tensions between two of the largest economies in the world may be easing.
After Monday's meeting, U.S. president Donald Trump emphasized the positive aspects of the discussions.
Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, as well as U.S. trade representative Jamieson Greer will meet with their Chinese counterparts again on Tuesday in London.
Markets will likely be relieved if the talks progress, given Trump's frequently changing tariff announcements. These have disrupted supply chain and threatened to stymie global growth.
The MSCI All-Country World Index, which reflects world stocks, reached near-record highs while the dollar clawed higher against a variety of currencies.
"While market participants clearly take a half-full outlook on the outlook, both in terms of trade policy and broader, we do not think this should be interpreted to mean that tariffs will fully be unwound," Jonas Goltermann said, deputy chief markets analyst at Capital Economics.
Goltermann expects U.S. duty on Chinese goods will settle at around 40 percent, while the majority of analysts say that the 10% universal levy on imported products into the United States will remain.
STOXX 600 in Europe was flat for the day. Investors focused on vaccine manufacturers after U.S. Secretary of Health Robert F. Kennedy Jr. fired an entire panel vaccine experts. GSK shares fell by 0.6% while Sanofi, Bavarian Nordic and Bavarian Nordic all rose between 0.6-1.3%.
In Tokyo, Finance Minister Katsunobu Kato announced that policymakers are looking into measures to promote the domestic ownership of Japanese Government Bonds. This comes a day following reports that Japan was considering buying back super-long government bond issued in previous years at low interest rates.
Last month, yields on super-long JGBs reached record levels due to the waning demand from traditional investors such as life insurance companies and concerns over rising global debt levels.
The yield of the 10-year JGB remained flat at 1.47%. Meanwhile, 30-year yields increased by 1 bp to 2.92% after a decline from a high of 3.18% in late May.
Dollar pares some Monday's losses in currencies
The dollar was unchanged at 144.6 yens. After weak UK employment figures, the euro dropped 0.13% to 1.14 and sterling fell 0.5% to 1.003477.
QUALITY, NOT SIZE
Investors' confidence in U.S. assets has been eroded by Trump's unpredictable trade policies, and concerns over Washington's increasing debt. The dollar is down more than 8% so far this year.
The deficit will remain stable, and the Americans won't be able to blow up their fiscal situation. Samy Chaar is an economist with Lombard Odier.
You'll have macropayoffs if you spend and invest on productive investments. You'll develop an industry, strengthen your economy, create jobs. "If you reduce revenues by cutting taxes on people that don't require the money, then they won't consume more or invest more. So the macropayoff is limited," said he.
U.S. Treasuries yielded around 4.45% on Monday, down 3.2 basis point from the previous day.
The impact of tariffs on the price of goods could be revealed by data on U.S. Consumer Inflation for May, due to be released on Wednesday.
The report on the producer price index will be published a day after.
Kevin Ford, Convera’s FX and macrostrategist, said that the May CPI and PPI figures in the United States will be closely examined for any signs of inflationary pressures.
If core CPI continues to be elevated, rate cuts may not occur at the FOMC meeting on June 18.
The traders expect that the Fed will leave rates unchanged during its next policy meeting. By December, only 44 bps of easing had been priced in.
Oil prices increased on commodity markets as a result of the optimism that Tuesday's U.S. China talks would ease trade tensions, and increase demand for energy. Gold spot rose by 0.15%, to $3332 per ounce.
(source: Reuters)