The White House released a detailed memo outlining Thursday’s Trump/Xi trade agreement. China will pause for one year recently imposed export controls on rare earth minerals and magnets in favor of issuing “general licenses for exports of rare earths, gallium, germanium, antimony and graphite for the benefit of U.S. end users and their suppliers.” China also agreed to suspend all retaliatory tariffs imposed on U.S. agricultural products and non-tariff countermeasures like placing American corporations on the government’s “end user and unreliable entity lists.” The U.S. will halve its fentanyl tariff rate and shelve a range of threatened retaliatory tariffs to reduce the total effective Chines tariff rate from 57% to 47% (including the roughly 25% blended tariff still maintained from Trump’s first term.)
Bloomberg reports that Citigroup and Morgan Stanley are developing capabilities to become clearing members of London gold markets and offer precious-metal vaulting services to clients who are increasingly seeking participation in the precious-metal bull market. Currently, only four banks (JPM, HSBC, UBS & ICBC) own and operate the London Precious Metals Clearing Limited (LPMCL) system, which is used for clearing and settlement of gold and silver transactions.
In an effort to further consolidate Chinese gold trading at the Shanghai Exchange, China announced that as of November 1, China’s gold retailers will no longer enjoy exemption from the 13% VAT tax on all physical gold transactions including both investment products like bars and coins and non-investment products like jewelry (together composing 17% of global gold demand). Jewelry producers retain partial exemption but will still pay a 7% VAT tax on products sold away from the Exchange. Spot gold initially fell 1% to $3,962 but has since rallied above $4,000.
At a G7 meeting of energy and environment ministers in Toronto, Canadian Energy and Natural Resources Minister Tim Hodgson announced Canada will mobilize public and private capital to fast-track graphite, rare earth and scandium production as part of the CAD$6.4B Critical Minerals Production Alliance, beginning with an offtake agreement for scandium and graphite with Rio Tinto and (Quebec-based) Nouveau Monde Graphite.
U.S. Treasury Secretary Scott Bessent kept the pressure on the Fed by declaring parts of the U.S. economy (particularly housing) may already be in recession due to high interest rates, “I think that there are sectors of the economy that are in recession…and the Fed has caused a lot of distributional problems with their polices.”
Euro Stoxx 50 +0.55%, S&P futures +0.3% and Nasdaq futures +0.6%. DXY dollar index +0.05%, spot gold +0.2% and spot silver +0.2%.
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