Gold Drops Back Below $4,000 After China Ends Tax Incentive

Summary:

Gold dropped below $4,000 an ounce after China ended a long-standing tax rebate for some retailers, a change that could hurt demand in one of the largest precious-metals markets.

Bullion fell as much as 0.6% to about $3,978 an ounce in early Asian trading. Beijing announced on Saturday that it would no longer allow some retailers to offset a value-added tax when selling gold they bought from the Shanghai Gold Exchange and Shanghai Futures Exchange, whether sold directly or after processing.

The precious metal surged to a record high in early October, aided by a buying frenzy among retail investors around the world, before dropping sharply in the final two weeks of the month. Prices are still more than 50% higher year-to-date even after the pull-back, with many of the fundamentals that pushed it higher expected to remain in place, including central-bank demand and investors seeking haven assets.

"While Chinese gold demand has played little part in this year's record bull market, the tax changes in gold's heaviest consumer nation will dent global sentiment," said Adrian Ash, director of research at BullionVault. "This news could prove very welcome to traders and investors hoping for a deeper correction after last month's spike."

Most fabricators in China had been deducting value-added tax on inputs when selling downstream to consumers. Under the new policy, — which will stay in place until the end of 2027 — the tax incentive is reserved for members of SGE and Shanghai Futures Exchange, which include major banks, refineries and fabricators who can directly participate in trading.

Source: Bloomberg Europe

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Laura Fletcher

Chinese oil refiners are shunning Russian shipments after the US and others blacklisted Moscow's top producers and some of its customers.

State-owned giants such as Sinopec and PetroChina Co. are staying on the sidelines, having canceled some Russian cargoes in the wake of US sanctions on Rosneft PJSC and Lukoil PJSC last month, according to traders. Smaller private refiners, dubbed teapots, are also holding off, fearful of attracting similar penalties to those faced by Shandong Yulong Petrochemical Co., which was recently blacklisted by the UK and European Union.

The Russian crudes affected include the widely-favored ESPO grade, which has seen prices plunge. Consultancy Rystad Energy AS estimates some 400,000 barrels a day, or as much as 45% of China's total oil imports from Russia, are affected by the buyers' strike.

Russia has cemented itself as China's biggest foreign supplier, in part because its oil is so heavily discounted due to the penalties imposed by other countries after the invasion of Ukraine.

The US and its allies are now ratcheting up those sanctions, on both Russian producers and their customers, in a bid to stop the war by choking off Moscow's oil revenues. China is the world's biggest crude importer, and any constraints on sourcing from its neighbor are likely to work to the benefit of other suppliers.

Those could include the US, which agreed a landmark trade truce with Beijing at a meeting last week between leaders Donald Trump and Xi Jinping. But the sanctions aren't a total loss for Moscow. Blacklisted Yulong, which has had cargoes canceled by western suppliers, has turned heavily to Russian oil because of a lack of other options.

Meanwhile, other private refiners are watching developments and refraining from actions that could trigger similar sanctions, according to Rystad. In any case, teapots are running up against a shortage of import quotas for crude oil, after tax changes shrank their use of other feedstocks. That's likely to impede teapots' purchases of Russian oil for the remainder of the year even if they were willing to skirt sanctions.

And if anything, the meeting between Trump and Xi has only added to the muddle. While the leaders were able to establish new ground rules for trade in items like semiconductors, rare earths and soybeans, what to do about Russian oil wasn't mentioned in any public readouts.

China will effectively suspend implementation of additional export controls on rare earth metals and terminate investigations targeting US companies in the semiconductor supply chain, the White House announced.

A dramatic rebound in clean-tech stocks has investors in the green economy hoping they can finally turn the page on years of punishing underperformance.

China is scrapping a long-standing gold tax incentive in a potential setback for consumers in one of the world's top bullion markets.

Source: Bloomberg Europe

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Nathaniel Wright

President Donald Trump said he would skip attending the Supreme Court hearing this week over the legality of his worldwide tariffs regime.

"I don't want to call a lot of attention to me," Trump told reporters on Air Force One as he returned to Washington from his Mar-a-Lago estate on Sunday. "It's not about me, it's about our country."

The court is scheduled on Wednesday to hear Trump's appeal of a lower court's ruling that many of his "Liberation Day" tariffs exceeded the president's emergency power to regulate imports.

Trump called the eventual Supreme Court ruling "one of the most important decisions in the history of the country."

"If we don't have tariffs, we don't have national security, and the rest of the world would laugh at us because they've used tariffs against us for years and took advantage of us," he said Sunday.

Trump had said he felt an "obligation" to watch in person as the Supreme Court weighed his power to impose tariffs. If he had attended, he would have been the first sitting president in US history to attend oral arguments at the high court.

Source: Bloomberg Europe

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Olivia Brooks

Economic

Parts of the U.S. economy, particularly housing, may already be in recession because of high interest rates, U.S. Treasury Secretary Scott Bessent said Sunday, repeating his call for the Federal Reserve to accelerate rate cuts.

"I think that we are in good shape, but I think that there are sectors of the economy that are in recession," Bessent said on CNN's "State of the Union" program. "And the Fed has caused a lot of distributional problems with their policies."

Bessent said that, although the overall U.S. economy remains solid, high mortgage rates still hinder the real estate market. Housing, he said, is effectively in a recession that is hitting low-end consumers the hardest because they have debts, not assets.

Pending home sales in the United States were flat in September, according to the National Association of Realtors.

The treasury secretary characterized the overall economic environment as in a transition period.

Fed Chair Jerome Powell last week signaled that the central bank may not cut rates further at its December meeting, prompting sharp criticism from Bessent and other Trump administration officials.

Federal Reserve Governor Stephen Miran, who is on leave from his post as chairman of the White House Council of Economic Advisers, said in an interview with the New York Times published on Saturday that the Fed risked inducing a recession if it did not swiftly lower interest rates.

Miran, who is due to return to his White House job in January, was one of two central bank governors who dissented from last week's Fed decision to lower interest rates by 25 basis points, arguing instead for a cut of 50 basis points, or 0.5 percentage point.

"If you keep policy this tight for a long period of time, then you run the risk that monetary policy itself is inducing a recession," Miran said in the New York Times interview, which was conducted on Friday. "I don't see a reason to run that risk if I'm not concerned about inflation on the upside."

Bessent Says High US Interest Rates May Have Caused Housing Recession_1

Bessent echoed that view, saying that the Trump administration's cuts in government spending had helped to lower the deficit-to-gross-domestic-product ratio to 5.9% from 6.4%, which in turn should help lower inflation. The Fed can also help by continuing to bring down interest rates, he said.

"If we are contracting spending, then I would think inflation would be dropping. If inflation is dropping, then the Fed should be cutting rates," he said.

Source: Investing

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Dark Current

Economic

Commodity

Oil advanced after OPEC+ said it plans to pause output increases during the first quarter after making another modest hike for next month.

Brent crude rose above $65 a barrel, while West Texas Intermediate traded near $61. The Organization of the Petroleum Exporting Countries and its allies said on Sunday they would raise crude production by about 137,000 barrels a day in December, matching increases scheduled for October and November, then take a January-to-March hiatus.

The move by OPEC+ comes as the market faces the prospect of a ballooning oversupply that has seen Brent lose 10% over the past three months. Prices have pulled back from a five-month low after increased US sanctions on Russia created question marks about the supply prospects from the major exporter.

"Delegates said the decision to pause from January reflects expectations of a seasonal slowdown," ANZ Group Holdings Ltd. analysts Brian Martin and Daniel Hynes said in a note. "We suspect they're also aware that the market may struggle to take any additional barrels, particularly if disruptions to Russian supply end up being temporary."

Traders will also be monitoring physical disruptions to supply, after a massive Ukrainian drone attack on Russia's Black Sea region left an oil tanker ablaze and damaged oil-loading facilities in the port city of Tuapse. The area is home to a major refinery run by Rosneft PJSC, which was sanctioned along with Lukoil PJSC by the Trump administration last month.

Source: Bloomberg Europe

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Gerik

Economic

China–U.S. Trade War

A Strategic Pause in the US-China Trade Dispute

On November 1, the White House formally released the details of a new trade agreement reached between President Donald Trump and Chinese President Xi Jinping. The deal is aimed at easing economic tensions between the world’s two largest economies and restoring a level of predictability to bilateral trade flows. It features a reciprocal series of tariff reductions and a moratorium on critical export controls, particularly targeting the technology and agricultural sectors.

As part of the agreement, the United States will reduce its tariffs on Chinese goods by 10 percentage points, lowering the average tariff rate from 57% to approximately 47%. A more specific reduction was also announced for fentanyl-related imports, which will see their tariff rate halved from 20% to 10%.

In addition, the US government agreed to suspend for one year an expansion of the Department of Commerce’s blacklist, which restricts Chinese firms from acquiring American technology. This measure, initially designed to curb circumvention via subsidiaries, will now be delayed, giving Chinese firms more time to comply or restructure operations.

Furthermore, new port fees for Chinese-built, owned, or flagged vessels will be postponed for a year offering temporary relief to the shipping and logistics sectors, which have been entangled in maritime tensions since mid-2022.

China’s Commitments: Raw Material Access and Chip Production Continuity

On the Chinese side, significant concessions were made regarding export controls. Beijing agreed to pause all new restrictions on rare earth elements and magnets for one year and to issue general export licenses for critical materials including gallium, germanium, antimony, graphite, and rare earths. This move effectively nullifies the restrictive measures China had imposed in April 2025 and October 2022, which had disrupted global supply chains for advanced manufacturing.

China also pledged to maintain operations at the domestic facilities of Nexperia, a semiconductor company, ensuring the continued supply of legacy chip products vital to global markets. This commitment underscores a shared interest in stabilizing the semiconductor ecosystem amid geopolitical fragmentation.

Rollback of Countermeasures: Agriculture and Shipping Industries Benefit

In another major development, China agreed to suspend all retaliatory tariffs imposed since March 4, 2025. These included levies on key US agricultural exports such as wheat, corn, cotton, soybeans, pork, and beef. Non-tariff barriers and anti-dumping investigations targeting US firms especially those in semiconductor supply chains will also be lifted or discontinued.

Notably, China has pledged to resume large-scale soybean imports, promising a minimum purchase of 12 million tonnes for the current season and 25 million tonnes annually over the next three years. This commitment reinstates China as a central buyer of American agricultural output and may help soothe political tensions in US farming regions.

Strategic Implications and Global Signaling

The agreement signals a rare moment of detente in an otherwise turbulent bilateral relationship. While neither side has completely dismantled structural barriers, the temporary rollbacks suggest a recognition of mutual economic interdependence, particularly in high-stakes sectors such as agriculture, semiconductors, and rare earths.

From a strategic standpoint, the deal is not just a tariff compromise, it is also a signal to global markets that Washington and Beijing can recalibrate relations through negotiated mechanisms rather than escalation. However, it is important to note that the agreement is limited in duration, with most major suspensions capped at one year. This makes the underlying arrangement more of a ceasefire than a long-term solution.

The US-China trade agreement reflects a tactical convergence of economic interests amid a backdrop of strategic competition. While the reduction in tariffs and removal of retaliatory barriers offer immediate relief to key industries, the temporary nature of these measures leaves open the possibility of renewed conflict. The agreement offers a window for both countries to reassess long-term policies, but without deeper structural alignment, future volatility remains likely. As global supply chains adapt, the efficacy of this deal will depend on follow-through, compliance, and the evolving geopolitical landscape.

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Gerik

Economic

Strategic Pivot: Russia Taps Yuan Reserves for Domestic Investment

In a groundbreaking financial move, Russia is preparing to issue its first-ever yuan-denominated sovereign bonds on the domestic market. According to multiple sources cited by Reuters, the Ministry of Finance is set to roll out four tranches of bonds totaling 400 billion rubles (approximately $5 billion), with maturities ranging from 3 to 10 years. The offering, slated for early December, is designed to serve as a new investment channel for Russian exporters and banks that have accumulated vast reserves of Chinese yuan through energy trade.

This decision comes at a critical time when Russia is under tightening US sanctions, particularly against its energy giants Rosneft and Lukoil. With the deadline of November 21 for sanctions enforcement, these companies are repatriating yuan-denominated earnings rapidly. As a result, domestic liquidity in yuan has soared, pushing interest rates on yuan deposits in Russia to historic lows.

Yuan Liquidity Surge Drives Financial Innovation

Driven by a ballooning trade relationship with China totaling a record $245 billion in 2024, with 90% of transactions now settled in rubles and yuan Russia faces a surplus of yuan liquidity. Energy exports alone accounted for $47.6 billion in bilateral trade during the first eight months of 2025, comprising one-third of the total. This imbalance has created a unique monetary environment where exporters, particularly in oil and gas, are searching for yuan-based investment vehicles.

The upcoming bond issuance is thus not just a funding strategy but a structural mechanism to absorb excess yuan in the domestic banking system. Analysts at Renaissance Capital emphasize that this bond scheme will alleviate currency mismatch risks and strengthen financial safety buffers within banks saturated with yuan deposits.

Investor Landscape and Regulatory Constraints

The Russian government has already initiated consultations with potential domestic investors including banks, asset managers, and brokerage firms catering to retail clients to pre-market the bonds. Despite the initiative’s scale, its scope will be limited. Since the bonds are expected to be traded on the Moscow Exchange (MOEX), which is currently under Western sanctions, foreign investors including Chinese institutions are unlikely to participate. This restricts the issuance’s reach to domestic entities, narrowing investor diversity but strengthening internal circulation of yuan-based assets.

Importantly, while the bonds are denominated in yuan, transactions can also be settled in rubles at prevailing exchange rates, allowing for flexibility in settlement methods. This dual-option approach may enhance appeal for domestic buyers while easing pressure on the central bank’s foreign exchange operations.

Geopolitical and Market Implications

The bond issuance marks a strategic milestone in Russia’s broader effort to de-dollarize its financial system and deepen economic integration with China. The initiative complements ongoing negotiations to establish a financial "bridge" between Russian and Chinese markets allowing cross-border asset investment beyond Western regulatory oversight. However, progress on this front remains stalled, suggesting the yuan bond issuance is both a financial necessity and a symbolic gesture of autonomy.

The bond plan also underscores Moscow’s pragmatic response to international isolation. Instead of viewing sanctions solely as constraints, Russian financial authorities are leveraging them to accelerate alternative financial infrastructure and regional currency alignment. This causal relationship between external pressure and internal policy innovation demonstrates how geopolitical stressors are reshaping Russia’s capital markets.

Russia’s planned yuan bond issuance reflects a confluence of strategic necessity and financial innovation. It addresses liquidity management challenges stemming from the country's deepening energy trade with China while creating investment opportunities in a closed financial environment. If successful, it could lay the groundwork for a broader yuan-based capital market in Russia, further anchoring Sino-Russian economic interdependence and accelerating the de-dollarization of Eurasian trade. As energy cooperation deepens and geopolitical divisions widen, this bond initiative may mark the beginning of a long-term financial realignment.

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