Indian Stocks Soar After U.S. Tariff Cut Deal

India has agreed to a new trade deal with the United States, committing to purchase a range of American products in a move designed to rebalance the trade relationship between the two countries. The agreement covers key sectors including petroleum, defense, electronics, pharmaceuticals, and telecommunications.

'Buy American': A Plan to Tackle the Trade Deficit

The deal follows an announcement from U.S. President Donald Trump, who stated that India had agreed to "BUY AMERICAN at a much higher level." According to Trump, the pact involves slashing U.S. tariffs on Indian goods from 50% to 18% in exchange for India halting oil purchases from Russia and lowering its own trade barriers.

An Indian government official, speaking on the condition of anonymity, confirmed that the primary goal of the agreement is to reduce the trade deficit the U.S. currently has with India.

Recent data from India's commerce ministry highlights this imbalance. In the period from January to November, India's exports to the U.S. reached $85.5 billion, a 15.88% year-on-year increase. In contrast, U.S. imports into India stood at $46.08 billion.

President Trump suggested the potential scale of future purchases could be massive, estimating India could buy up to $500 billion worth of U.S. energy, coal, technology, and agricultural products.

Key Sectors Targeted in the Agreement

The commitment to buy American goods is a multi-year plan targeting several strategic industries. According to the official source, the list of products includes:

• Petroleum

• Defense goods

• Aircraft

• Pharmaceuticals

• Telecom products

In addition to these purchases, India has reportedly offered greater market access for some American agricultural products and has cut tariffs on automobiles as an immediate step to address Washington's concerns.

A Phased Approach and Market Impact

This agreement is being treated as the first part of a broader negotiation, with a more comprehensive deal expected to be worked out in the coming months.

The announcement of the initial deal was met with enthusiasm by investors. On Tuesday, India's benchmark Nifty 50 stock index surged by nearly 3%. The Indian rupee also strengthened, climbing over 1% to trade at 90.40 per dollar in early trading.

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Source: Reuters

President Donald Trump is scheduled to meet Colombian President Gustavo Petro at the White House on Tuesday, setting the stage for a tense diplomatic encounter just weeks after Trump accused the South American leader of flooding the U.S. with cocaine and threatened military action.

While administration officials state the official agenda will cover regional security and counternarcotics, the meeting is shadowed by recent hostility between the two presidents. Trump himself hinted at a shift in dynamics, suggesting Petro has become more cooperative following the U.S. operation to capture Venezuela's Nicolás Maduro.

"Somehow after the Venezuelan raid, he became very nice," Trump told reporters. "He changed his attitude very much."

A tale of two leaders: Colombian President Gustavo Petro (left) and U.S. President Donald Trump (right) are set for a high-stakes meeting.

A Meeting Fraught with Unpredictability

The ideological gap between the conservative Trump and the leftist Petro is vast, but both leaders share a reputation for verbal bombast and unpredictable behavior. This dynamic has created an "anything-could-happen" atmosphere surrounding the White House visit.

Even with the meeting looming, Petro has continued to publicly challenge the U.S. president. He recently called Trump an "accomplice to genocide" in the Gaza Strip and described the capture of Maduro as a kidnapping. Before leaving for Washington, Petro also called on his supporters in Colombia to protest in the streets of Bogotá during his meeting with Trump.

Sanctions, Threats, and the Maduro Factor

Historically, Colombia has been a key U.S. ally, particularly over the last 30 years in the fight against drug traffickers and rebel groups. However, the relationship has soured under the two current leaders.

Tensions have been inflamed by several key developments:

• Aggressive Military Action: The Trump administration has authorized unprecedented and deadly military strikes against suspected drug smuggling boats in the Caribbean and Pacific, resulting in at least 126 deaths in 36 known incidents.

• Direct Sanctions: In October, the Treasury Department imposed sanctions on Petro, his wife Veronica del Socorro Alcocer Garcia, his son Nicolas Fernando Petro Burgos, and Interior Minister Armando Alberto Benedetti over alleged involvement in the drug trade. These sanctions had to be waived to permit Petro's travel to Washington.

• Diplomatic Downgrade: In September, the U.S. added Colombia to its list of nations failing to cooperate in the war on drugs for the first time in three decades.

The recent U.S. military operation to capture Maduro and his wife on federal drug charges, which Petro has strongly condemned, brought the conflict to a head. Following the operation, Trump issued a direct warning to Petro, stating he could be next.

"And he's not gonna be doing it very long, let me tell you," Trump said of Petro last month, calling Colombia a country "run by a sick man who likes making cocaine and selling it to the United States."

Despite the sharp rhetoric, the two leaders later spoke by phone for an hour, which appeared to de-escalate the situation and led to Trump's invitation for the White House visit.

Will Past Precedent Predict a Public Rebuke?

President Trump has a history of using official meetings to publicly confront world leaders. In February, Trump and Vice President JD Vance criticized Ukrainian President Volodymyr Zelenskyy for what they saw as insufficient gratitude for U.S. aid. Similarly, during a May meeting, Trump forcefully accused South African President Cyril Ramaphosa of failing to address baseless claims about the killing of white farmers.

It remains unclear whether the meeting between Trump and Petro will include a portion in front of the press, leaving open the possibility of another candid and potentially volatile diplomatic exchange.

Trade Deal Signals Drive Regional Risk Appetite

South Korea Leads With Volatility-Driven Surge

Japan, China And Australia Join The Upswing

Precious Metals And U.S. Markets Provide Supportive Backdrop

Source: CNBC

Central bank demand for gold cooled in 2025 but remained far above historical averages, signaling a continued strategic shift toward the precious metal among the world's monetary authorities.

Official institutions accelerated their purchases in the final quarter, adding 230 tonnes to global reserves—a 6% increase over the previous quarter. According to the World Gold Council, this pushed total net buying for the year to 863.3 tonnes.

While this figure represents a 21% decrease from the record-breaking 1,136 tonnes purchased in 2022 and marks the lowest annual total since 2021, it was still the fourth-largest expansion of central bank gold holdings on record. The buying frenzy far outpaced the 2010-2021 annual average of just 473 tonnes.

Figure 1: This chart of annual central bank net gold purchases shows that while 2025 demand moderated from the 2022-2024 peaks, it remained significantly above the 2010-2021 historical average, highlighting gold's sustained strategic appeal.

Price Sensitivity and Strategic Appeal

The surging gold price was a likely factor behind the more measured pace of accumulation. The World Gold Council noted that higher prices prompted "a more cautious approach," demonstrating that central banks are not immune to market dynamics, even as their long-term strategic interest remains firm.

Despite falling short of the 1,000-tonne mark, the council described the 2025 demand as "impressive," underscoring the metal's role as a key reserve asset. In fact, late last year, gold surpassed U.S. Treasuries to become the world's largest foreign reserve asset.

Poland Leads the Global Gold Rush

In 2025, twenty-two central banks increased their gold reserves by at least one tonne, with Poland leading the pack.

The National Bank of Poland (NBP) was the top buyer, adding 102 tonnes to its vaults. This brought the country's total holdings to 550 tonnes, which now accounts for approximately 28% of its official reserves. For context, the NBP held only 14 tonnes in 1996 and now holds more gold than the European Central Bank.

Poland's ambitions don't stop there. The NBP has announced plans to purchase up to 150 more tonnes, aiming for a total of 700 tonnes. NBP Governor Adam Glapiński stated this move would elevate Poland to an "elite" status, placing it "among the elite 10 countries with the largest gold reserves in the world."

Other Major Buyers in 2025

Several other nations made significant additions to their gold reserves:

• Kazakhstan: The National Bank of Kazakhstan was the second-largest buyer, adding 52 tonnes in its biggest annual purchase since 1993. Governor Timur Suleimenov confirmed the bank intends to remain a net buyer until global tensions ease.

• Brazil: After a pause, Brazil re-entered the market, with its central bank adding 43 tonnes between September and November, boosting its total reserves to 172 tonnes.

• Turkey: The Central Bank of Turkey continued its steady buying streak, adding 27 tonnes over the year through a series of smaller, consistent purchases.

• Czech Republic: The Czech National Bank also pursued a slow-and-steady strategy, buying gold for 34 consecutive months. It added 20 tonnes in 2025, bringing its total to 72 tonnes, with a goal of reaching 100 tonnes by 2028.

China's Official vs. Unofficial Gold Holdings

The People's Bank of China (PBoC) officially reported a more modest 27-tonne increase in its gold reserves for 2025, bringing its declared total to 2,306 tonnes. China has now reported increases for 14 straight months, adding 402 tonnes over that period.

However, many analysts believe China's official numbers tell only part of the story. Researcher Jan Nieuwenhuijs has reported that the PBoC is secretly accumulating vast amounts of gold off the books. His analysis suggests China may hold over 5,000 tonnes of monetary gold in Beijing—more than double its publicly admitted figure.

This trend of "opaque activity" was also highlighted by the World Gold Council, which found a major gap between estimated demand and officially reported data. This discrepancy, accounting for 57% of the annual total, suggests substantial unreported buying by official institutions.

Few Sellers in a Bullish Market

While buying was widespread, selling was minimal. The most notable sellers in 2025 were:

• Singapore: Decreased reserves by 14 tonnes.

• Russia: Sold 6 tonnes.

• Jordan: Reduced holdings by 1 tonne.

• Germany: A 1-tonne decrease was linked to its coin minting program.

Outlook: Central Banks Remain Bullish on Gold

Despite the slowdown from 2022's record pace, the underlying trend remains strong. The World Gold Council expects persistent economic and geopolitical uncertainty to sustain demand for gold as a core reserve asset.

A 2025 survey of central banks reinforces this view. An overwhelming 95% of respondents expect global central bank gold reserves to increase over the next 12 months. Furthermore, 43% believe their own institution's gold reserves will rise, while none anticipated a decline.

President Trump’s nomination of Kevin Warsh for Federal Reserve Chairman has sent a shockwave through the markets. The consensus view is that Warsh is a monetary "hawk," and investors are selling off assets in fear that the era of easy money is coming to an abrupt end.

While the market's reaction is clear, the reasoning behind it may be flawed. Warsh's reputation precedes him, but his future actions are likely to be dictated by forces far greater than his own policy leanings.

Who Is Kevin Warsh?

Kevin Warsh, 55, is no stranger to the Federal Reserve, having served as a governor from 2006 to 2011. At 35, he was the youngest nominee ever appointed to the central bank's board. His resume includes a background in mergers and acquisitions at Morgan Stanley and a role as Special Assistant to the President for Economic Policy in the George W. Bush administration.

Historically, his record justifies the "hawk" label. Warsh has publicly criticized the Fed for its rapid rate cuts during the financial crisis, citing inflation risks, and was the sole member to oppose the second round of quantitative easing (QE2) in 2011. He has also been a vocal critic of the Fed's bloated balance sheet.

However, his recent commentary tells a different story. In the past year, Warsh has aligned himself with President Trump, calling for a "regime change" at the Fed and criticizing the institution for not cutting interest rates fast enough. He argued that the Fed's hesitancy was a "mark against them," suggesting a need for a new policy direction more in line with the president's demands.

Markets Tumble on Nomination News

The market's response to Warsh's appointment was immediate and severe. Gold prices plummeted by over $300 an ounce to just hold the $5,000 level, while silver fell by $17 to below $100. Stocks also declined, extending a sell-off that began when rumors of the nomination first surfaced.

This reaction stems from the belief that a hawkish Fed chair will maintain higher interest rates, which acts as a headwind for non-yielding assets like precious metals. The sell-off was likely amplified by algorithmic trading and panic selling as prices breached key levels.

The nomination came as a surprise. After months of President Trump criticizing current Fed Chair Jerome Powell for not lowering rates more aggressively, most observers expected him to choose a compliant, easy-money advocate. Warsh, with his hawkish reputation, does not fit that mold.

Why Warsh's Hawkish Stance May Not Matter

Despite the market's perception, there are two compelling reasons to believe Warsh will not lead the Fed into a new era of tight money.

1. The Trump Factor

President Trump has been relentless in his demand for lower interest rates. It is highly unlikely he would nominate a Fed Chair without being confident that the candidate would steer monetary policy in his preferred direction. Warsh's recent critique of the Fed for its slow rate cuts suggests he has signaled a willingness to be more accommodative.

While it's possible Warsh could revert to his old policy views once confirmed, his current alignment with Trump is a strong indicator of his initial approach. Furthermore, the Fed Chair is only one of 12 voting members on the Federal Open Market Committee (FOMC). One person’s hawkishness does not guarantee a hawkish Fed.

2. The Debt Black Hole Demands Easy Money

More importantly, the incoming Fed Chair will inherit an economy fundamentally dependent on low interest rates. The massive levels of debt across the globe create a structural demand for easy money that no single central banker can ignore.

The Fed is caught in a Catch-22: it needs to raise rates to combat inflation, but it also needs to cut them to prevent the debt-laden economy from collapsing. When faced with this choice, any central banker—hawk or dove—will almost certainly prioritize rescuing the economy over taming inflation.

Warsh has previously suggested that the Fed could afford lower rates if it first reduced its balance sheet. In theory, this is plausible. In reality, the Fed is already moving in the opposite direction.

Figure 1: The Federal Reserve's balance sheet showed a modest increase in late 2025, a move that contradicts its broader unwinding efforts and signals a potential return to quantitative easing.

After a period of reduction, the Fed’s balance sheet has grown modestly in the last month, signaling a quiet return to QE. This trend is likely to accelerate as the central bank is forced to monetize the U.S. government's enormous deficits. With global demand for U.S. Treasuries weakening—evidenced by persistently high bond yields despite the Fed's efforts—the central bank remains the buyer of last resort.

The decision by AkademikerPension, a Danish pension fund, to divest from U.S. Treasuries highlights this waning demand. The fund cited concerns over America’s poor government finances, not politics, as the reason for its decision.

Final Take: An Overreaction to an Old Reputation

Ultimately, the economic landscape Warsh will inherit is defined by the bubbles and malinvestments created by nearly two decades of easy money. The economy never fully recovered from the monetary policies of the Great Recession era; instead, the problems were papered over with even more stimulus during the pandemic.

A reckoning is due, and when it arrives, the Fed will be forced to act. Warsh's personal policy preferences will be secondary to the ugly economic realities he will confront. The sharp sell-off in gold and silver following his nomination appears to be an overreaction based on an outdated reputation, ignoring the structural forces that will almost certainly compel the next Fed Chair to keep the money flowing.