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

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

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

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 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

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

Rollback of Countermeasures: Agriculture and Shipping Industries Benefit

Strategic Implications and Global Signaling

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Yuan Liquidity Surge Drives Financial Innovation

Investor Landscape and Regulatory Constraints

Geopolitical and Market Implications