Gold Prices Surge to Two-Week High Ahead of Fed Meeting as Tariff Fears Grow

Commodity

Economic

Summary:

Gold jumped to its highest level in two weeks on May 6, 2025, as growing concerns over President Donald Trump’s tariff threats prompted investors to seek safety in precious metals..

Gold Prices Spike Amid Tariff Uncertainty

Spot gold rose 0.9% to $3,362.69/ounce, hitting its highest level since April 22. U.S. gold futures climbed 1.5% to $3,370.40. The rally came after President Trump revived trade war fears by announcing a 100% tariff on foreign-produced films and hinting at upcoming levies on pharmaceuticals. The lack of clarity surrounding these plans has intensified market anxiety.

Yeap Jun Rong, a market strategist at IG, explained that gold’s rise at the start of the week reflects investors’ shift toward safe-haven assets to hedge against portfolio volatility amid renewed trade tensions.

Fed Meeting in Focus: Status Quo Expected

Investors are closely watching the Fed’s rate decision and Chair Jerome Powell’s comments on May 7. The central bank has kept interest rates between 4.25% and 4.50% since December 2024. According to Reuters, the Fed is widely expected to hold rates steady during this meeting. However, this may be the last “predictable” decision, as Trump’s trade policies begin to cloud economic forecasts.

Goldman Sachs expects the Fed to require more labor market and inflation data before committing to rate cuts, predicting three quarter-point reductions in July, September, and October 2025.

Gold’s gains were mirrored across other precious metals. Spot silver rose 1.5% to $32.98/ounce, platinum climbed 1.4% to $972.25/ounce, and palladium edged up 0.5% to $945.25/ounce. These movements underscore investors' search for alternatives in a landscape defined by policy unpredictability and potential stagflation.

Vietnam Market Response

In Vietnam, Saigon Jewelry Company (SJC) listed gold bar prices at VND 120.8–122.8 million per tael (buy–sell) on the afternoon of May 6, tracking international trends.

Gold’s momentum reflects mounting investor caution as markets brace for the dual impact of U.S. monetary policy uncertainty and aggressive tariff threats from the Trump administration. If the Fed maintains its current stance while economic risks escalate, gold may continue to benefit from its role as a hedge against inflation, currency devaluation, and geopolitical instability.

Source: Reuters

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Gerik

Economic

China–U.S. Trade War

China’s Exporters Turn to Third-Party Loopholes

Amid record-breaking tariffs imposed by President Donald Trump’s administration, Chinese companies are aggressively exploiting trade loopholes to avoid duties. On Chinese social media platforms like Xiaohongshu, a growing number of logistics services openly advertise "origin-washing" routes, promising to transform “Made in China” labels into Malaysian or Southeast Asian ones.

Sellers boast of being able to reroute products through ports like Klang (Malaysia), repackage them, and even obtain certificates of origin from local factories. A quoted service charges only 5 yuan (approximately $0.70) per kilogram to reclassify Chinese goods for U.S. entry.

Booming Grey Market Puts Neighbors at Risk

Countries across Asia are increasingly worried about becoming unwitting accomplices to trade fraud. South Korea recently reported $21 million worth of falsely declared Chinese goods in Q1 2025 alone. Vietnam’s Ministry of Industry and Trade has also urged domestic businesses to strengthen scrutiny over certificates of origin. Thailand followed suit with stricter controls on exports headed to the U.S.

A salesperson from Baitai Lighting in Zhongshan, Guangdong province, admitted: “We just sell to neighboring countries — they export to the U.S. instead. That way, the tariffs are much lower.” The company uses FOB shipping terms to avoid liability once goods leave Chinese ports.

Fake Documentation, Real Exposure

Many companies disguise goods through container relabeling, paperwork forgery, or blending high-value items with low-cost ones to understate declared value — all to manipulate customs duties. One unnamed logistics company claimed ties to Malaysian factories that can issue origin certificates, while another insider admitted that U.S. Customs “probably knows” but is limited in enforcement capacity.

Amid the fallout, Malaysia’s Ministry of Investment, Trade and Industry announced it would investigate the claims and cooperate with U.S. Customs if evidence emerges. “Falsifying origin or value is a serious offense,” the ministry emphasized in a statement.

Global Retailers Grow Wary

U.S. buyers are increasingly cautious. A senior executive from a top 10 Amazon seller revealed concerns about receiving shipments with suspicious origins. “We no longer allow Chinese suppliers to act as importers of record. There’s too much risk they’ll understate the value — and Customs could seize the shipment,” the executive warned.

A consumer goods producer in Dongguan recounted being introduced to brokers by industry associations who promised hassle-free access to the U.S. market. “I just deliver to a Chinese port — they handle the rest,” she said. “They say small businesses like mine can slip through the cracks. I really hope that’s true. The U.S. market is too big to lose.”

The rampant circumvention of U.S. tariffs via Southeast Asia has created a parallel trade ecosystem that is undermining regional trust and prompting regulatory crackdowns. While Chinese firms fight to preserve their U.S. market share, neighboring countries now face the dual burden of economic scrutiny and reputational risk.

Source: FT

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Michelle

Political

German conservative leader Friedrich Merz failed to secure enough parliamentary votes to become chancellor on Tuesday in a major blow that threw politics in Europe's largest economy once more into disarray.

Merz, 69, who led his CDU/CSU conservatives to a federal election victory in February and signed a coalition deal with the centre-left Social Democrats (SPD), won just 310 votes in the secret ballot in the lower house, the Bundestag, six short of an absolute majority. It meant at least 18 coalition MPs had failed to back him.

While not a fatal setback, Merz's failure to win parliamentary backing at the first time of asking is a first for post-war Germany and an embarrassment for a man who has promised to revive economic growth at a time of global turbulence.

Most immediately, it threw into doubt the trips Merz had planned to France and Poland on Wednesday as the new chancellor.

Nine lawmakers abstained while 307 voted against Merz, said Bundestag President Julia Kloeckner.

Merz, visibly shocked, rose to confer with colleagues. Party insiders had on Monday expressed confidence that he would secure a majority.

Kloeckner adjourned the parliamentary session to allow the parties to decide how to proceed. There was unlikely to be another vote on Tuesday.

"This is a significant negative. He (Merz) is still likely to be elected but this shows that the coalition is not united, which could weaken his ability to pursue policies," said Holger Schmieding, Chief Economist at Berenberg in London.

German shares extended their fall from near record levels and bond yields dipped. After the election in February, Merz had secured framework legislation for a huge borrowing programme focused on defence and infrastructure. Some of his own supporters were unhappy with the loosening of borrowing limits, however.

FOURTEEN DAYS TO ELECT CHANCELLOR

"... the government still needs to convince its own supporters that it will be able to deliver," said Carsten Brzeski, Global Head of Macro Research and Chief Eurozone Economist ING, Chief Economist ING Germany.

"The failed vote is clearly a sign that not everyone in the CDU agrees with the fiscal U-turn."

The Bundestag now has 14 days to elect Merz or another chancellor.

"The fact that Merz has now failed in the first round of voting sends a devastating signal to society and the economy: the ranks are not united," said Jens Suedekum from the Duesseldorf Institute for Competition Economics (DICE).

Merz's conservatives won February's election with 28.5% of the vote, leaving them in need of at least one partner to form a majority government.

On Monday, they signed a coalition deal with the SPD, who won just 16.4%, vowing to reform Germany.

But both parties have lost support since their already dismal performances in February, with the far-right Alternative for Germany, which came in second, topping some recent surveys.

"Merz failing to get elected in the first round casts a dark shadow over the future of the coalition," said Philipp Koeker, political scientist at the University of Hanover.

"Although I expect that he will be elected in the second round, the relationship between the parties will be severely damaged because of this and (it will) exacerbate the conflicts that are already bubbling beneath the surface."

Germany has not had a majority government since the collapse of Olaf Scholz's SPD-led three-way coalition last November, and is already facing an array of headwinds.

A global trade war sparked by U.S. President Donald Trump's sweeping import tariffs is threatening to cause a third year of recession in an economy that is having to rethink its business model.

Meanwhile, Trump has weakened the U.S. commitment to the NATO defence alliance, prompting Europe to rush to boost defence spending to be able to take more of the burden.

Source: Reuters

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Gerik

Economic

Forex

Historic Rally Stuns Markets

On May 5, the Taiwan dollar jumped 5% — the sharpest daily appreciation since the late 1980s — peaking at TWD 29.59 per U.S. dollar before settling slightly lower. This surge, extending gains from the prior week, pushed the currency to its highest level in three years. In just one month, the TWD has gained over 10%, sparking concern among investors and exporters.

Major Taiwanese exporters like TSMC felt the pressure, with shares falling as markets feared an unfavorable exchange rate would cut into overseas profits. This reversal came after a strong rally the week before.

Central Bank Holds Emergency Briefing

Taiwan’s central bank, led by Governor Yang Chin-long, held an emergency press conference at 4:30 p.m. local time to address the market’s extreme movements. Despite the volatility, authorities have yet to launch significant intervention, prompting speculation they may be allowing the TWD to appreciate strategically as part of a broader trade negotiation approach.

Transaction volumes for the USD/TWD pair hit their highest since the 2008 global financial crisis. Banks like Cathay United had to activate virtual queuing systems due to overwhelming demand.

Exporters, Insurers on Edge

Exporters scrambled to hedge against losses, while life insurers, who hold substantial USD-denominated assets, were caught off guard by the sudden shift. According to Taiwan’s Financial Supervisory Commission, local insurers currently hold roughly NT$575 billion in U.S. Treasuries — now exposed to rising currency risk.

BNP Paribas strategist Ju Wang remarked that panic has set in among exporters and life insurers, with capital outflows in equity markets also slowing to a halt. The market is now widely interpreting the TWD appreciation as a deliberate move — a goodwill gesture aimed at U.S. trade negotiators.

Trade Talks & Currency Diplomacy

Taiwan confirmed that it held its first round of trade negotiations with the U.S. on May 1 but provided no details. Analysts suggest that allowing the TWD to strengthen may serve as an “olive branch” to ease tensions and signal fair-play intentions amid accusations of currency manipulation.

The U.S. Treasury currently places Taiwan on its currency monitoring list. A stronger TWD could help Taiwan demonstrate compliance and ease scrutiny.

Policy Implications Loom

Observers are divided on what the central bank will do next. Historically, such large currency swings would prompt intervention to maintain stability. But this time, the lack of immediate action suggests the possibility of a policy pivot.

Christopher Wong from OCBC Bank notes that allowing market forces more freedom may be a tactical shift aligned with upcoming trade talks. Meanwhile, economist Woods Chen of Yuanta Securities argues that letting the TWD appreciate might be Taiwan’s most rational economic strategy at this juncture.

Source: Yahoo Finance

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Gerik

China–U.S. Trade War

Economic

Trump’s Tariff Shock Leaves the Fed at a Crossroads

As the Federal Open Market Committee (FOMC) convenes for a two-day meeting, the U.S. Federal Reserve finds itself grappling with one of the most complex policy environments in recent history. With President Donald Trump’s erratic trade measures pushing up import prices and shaking investor confidence, Fed Chair Jerome Powell must weigh inflation risks against the rising threat of stagflation—sluggish growth coupled with persistent price increases.

The central dilemma: lowering interest rates too soon may stoke inflation caused by tariff-induced supply chain disruptions. Waiting too long, however, could allow a deeper recession to take hold. Powell likened the situation to a goalkeeper forced to guess the direction of a penalty kick—an uncertain and high-stakes judgment call.

Internal Division: Patience vs. Preemption

The Fed's internal dynamics are far from unified. Some policymakers, like Cleveland Fed President Beth Hammack, advocate for caution, prioritizing data clarity over rushed responses: “I’d rather be slow and right than fast and wrong.” Meanwhile, Fed Governor Christopher Waller sees tariff-driven inflation as transitory and urges the Fed to be ready to support growth if economic activity deteriorates.

Former officials echo this divide. Ex-Fed Vice Chair Richard Clarida believes the central bank will refrain from proactive rate cuts unless the labor market sharply weakens. Eric Rosengren, former Boston Fed president, suggests rate cuts may be ineffective if the downturn stems from supply constraints, warning that monetary policy cannot fix trade-driven price shocks.

The Fed has walked similar paths before. It cut rates in 2024 to prevent recession but hiked aggressively in 2022–2023 to combat inflation. Now, with rising import costs and investor unease, the Fed may need to tolerate weaker growth in the short term to anchor inflation expectations.

Powell vs. Politics: The Trump Factor

Further complicating matters is political pressure from President Trump, who has openly criticized Powell’s caution. This undermines the Fed’s independence and clouds its communication strategy. Markets now face mixed signals—tight policy to control inflation on one side, and Trump’s calls for growth-supportive policies on the other.

Compounding uncertainty is the public’s inflation outlook. If consumers and businesses believe high inflation will persist, price-setting behavior may spiral, making it harder for the Fed to meet its 2% inflation target. Brainard warns that after a prolonged period of elevated inflation, expectations may no longer be well-anchored.

The Fed is effectively boxed in: easing too early risks inflation spiraling; tightening or staying put may worsen a trade-induced slowdown. With tariff fallout hard to model, many believe the Fed will maintain its current rate and adopt a cautious tone—holding off until stronger signals emerge.

Still, the margin for error is slim. The path ahead for U.S. monetary policy will not just be shaped by inflation or employment data—but by geopolitical risk, political pressure, and a volatile global trade environment.

Source: WSJ

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Gerik

Cryptocurrency

Trump’s Crypto Gambit: Fundraising Turns Digital with Blockchain and Meme Coins

Donald Trump’s political fundraising machine is pivoting sharply into the digital frontier this May, leveraging the booming world of cryptocurrencies and meme tokens to draw millions in contributions. Two upcoming events — a traditional ultra-high-dollar dinner and a gamified blockchain-based gala — are poised to test new methods of political access and donor engagement, drawing both praise from the crypto community and sharp criticism from ethics groups.

On May 5, MAGA Inc., a pro-Trump super PAC, is hosting the “Crypto & AI Innovators Dinner,” where seats cost $1.5 million each. The high-profile guest list includes President Trump and venture capitalist David Sacks, known for his influence over crypto and AI regulation in Washington. While MAGA Inc. is not directly linked to a reelection campaign, the funds are expected to support Trump-aligned candidates and policy efforts.

Later in the month, the second event takes the fundraising experiment to new extremes. Scheduled for May 22 at Trump National near Washington, D.C., the gala requires ownership of the $TRUMP meme coin for entry. Access is determined by a public leaderboard that ranks token holders on the blockchain — with the top 220 wallets gaining admission and the top 25 receiving VIP treatment including a “White House” tour and private reception.

Transparency Concerns and Ethical Fallout

The gamified contest has sparked criticism for enabling anonymous, and potentially foreign, actors to purchase political access. Because crypto wallets are pseudonymous, watchdog group Accountable.US warns that the setup may allow undisclosed donors to bypass traditional campaign finance oversight. Critics also note that the project’s structure could personally benefit Trump’s inner circle, especially given that the Trump Organization and its affiliates reportedly control around 80% of the token’s supply.

While the contest terms mention that Trump may not appear at the gala and that the event could be canceled for any reason — in which case attendees would receive a Trump NFT — demand for the token has surged. The $TRUMP coin jumped over 50% following the announcement, dramatically increasing its market value and transaction volume.

Trading Activity and Insider Profits

Since its launch in January, the $TRUMP token has generated over $324 million in transaction fees, according to blockchain analytics firm Chainalysis. These fees, accumulated through a built-in “tax” on each trade, are routed to wallets controlled by the coin’s developers — wallets that the project website links to Trump-affiliated entities.

Despite this windfall, insiders have reportedly agreed to delay selling their tokens for at least 90 more days. Still, the short-term valuation spike and fundraising totals indicate the powerful convergence of politics, celebrity branding, and decentralized finance.

While the events may prove effective in drawing money and attention, they raise fundamental questions about campaign transparency, digital asset regulation, and ethical boundaries. As Trump leads this new frontier of tokenized influence, regulators and voters alike will be watching closely — not just for fundraising totals, but for how far the blockchain model can bend the norms of political access.

Source: CNBC

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Diana Wallace

Commodity

Technical Analysis

Brent oil has recovered to 61.17 USD. The sharp two-day drop has paused. Discover more in our analysis for 6 May 2025.

Brent forecast: key trading points

● Brent prices have stabilised, but remain near a four-year low.

● The oil market faces simultaneous supply growth and a slowdown in global economies.

● Brent forecast for 6 May 2025: 62.11 and 62.63.

Fundamental analysis

Brent crude stabilised around 61.17 USD per barrel by Tuesday, halting a steep two-day sell-off. The pause in price decline was prompted by fresh headlines from the Middle East: Israel launched airstrikes on the port of Hudaydah in Yemen and a cement plant in response to a Houthi missile strike, which had targeted Israel's main airport.

The day before, Brent dropped by 1.7% as concerns about oversupply resurfaced. These worries intensified after OPEC+ announced its decision to accelerate production hikes for the second consecutive month.

Saudi Arabia, leading the group, also warned it may further raise output if member states that exceed quotas fail to bring production back in line.

This additional supply continues to weigh on prices, which now hover near their lowest levels in four years. Trade tensions between the US and China have reignited concerns over a global economic slowdown and weakening energy demand.

The forecast for Brent is negative.

Brent technical analysis

On the H4 chart, Brent prices have rebounded from a local low of 58.72 and moved up towards 61.00. For the bounce to transition into a sustained reversal, prices must consolidate above 62.11. This would pave the way for further gains towards 62.63.

However, the broader trend remains bearish.

Brent prices have recovered after a steep drop, but still trade near four-year lows. Markets are closely watching trade negotiations and OPEC+ actions. Geopolitical factors are again in focus. The Brent forecast for today, 6 May 2025, suggests a continued correction towards 62.63, passing through 62.11.