Gold Down After Hitting New High, Equities Mixed as Virus Spreads

Focus will turn to Capitol Hill, where lawmakers will try to hammer out a new stimulus package to support the rattled US economy | AFP
Focus will turn to Capitol Hill, where lawmakers will try to hammer out a new stimulus package to support the rattled US economy | AFP
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Gold Down After Hitting New High, Equities Mixed as Virus Spreads

Focus will turn to Capitol Hill, where lawmakers will try to hammer out a new stimulus package to support the rattled US economy | AFP
Focus will turn to Capitol Hill, where lawmakers will try to hammer out a new stimulus package to support the rattled US economy | AFP

Gold briefly chalked up another record Tuesday before easing later in the day as the dollar clawed back earlier losses, while equity markets struggled to hold on to gains with fears about the coronavirus pandemic mounting.

With worrying new spikes in infections in Asia and Europe -- on top of the already-high new US cases -- forcing governments to impose strict containment measures, the global economic outlook remains clouded, putting the brakes on a months-long stocks rally.

The virus uncertainty descending on trading floors, combined with China-US tensions, sent gold soaring nearly 30 percent and on Tuesday it hit another record of $1,981.27, smashing the previous day's all-time high, but it later pared the advance to sit lower for the day.

But observers say $2,000 could be broken as early as this week, with focus on the Federal Reserve's next policy meeting, which is tipped to see it unveil more easing measures to support the world's top economy.

US second-quarter economic growth data is also due this week, and a disappointing reading on what is expected to be a historic contraction could fuel further dollar weakness.

"Although little is expected on policy, (bank boss Jerome) Powell's tone in the press conference will be key especially in light of the recent uptick in virus cases and the knock-on consequences," said AxiCorp's Stephen Innes.

The rush for bullion has also dragged silver to a seven-year high above $26 an ounce before that also edged back.

"There seems to be enough momentum in the US money supply to actually push gold higher," Fat Prophets analyst David Lennox said.

"As COVID-19 continues to ravage the economy, there's probably more stimulatory action to come. As the US dollar weakens, obviously gold will improve, but it's more a matter of the acceleration of US money supply, and that's caused by governments obviously throwing money into the economy."

- 'Pathetic' proposal -

There are hopes US lawmakers can hammer out a new economy-boosting stimulus programme as their previous multi-trillion-dollar package begins to dry up.

After an extended period of haggling with the White House, Republicans eventually unveiled a $1 trillion scheme that slashes unemployment benefits by two-thirds.

However, there are concerns bipartisanship could make the passage of any bill arduous, with Democrats proposing $3.5 trillion of spending, while House Speaker Nancy Pelosi branded the Republican offer "pathetic" and not enough to support the country.

All three main indexes on Wall Street ended higher.

Hong Kong and Shanghai ended up 0.7 percent, while Seoul jumped 1.8 percent and Mumbai put on 0.9 percent.

Manila also put on more than one percent.

Taipei was marginally lower a day after hitting a record high, though market heavyweight chipmaker TSMC rose 10 percent for a second day, putting it among the top 10 biggest firms in the world briefly before it pared the gains.

Tokyo finished down 0.3 percent and Sydney shed 0.4 percent with Jakarta and Wellington also in the red.

London and Frankfurt started with gains though Paris dipped.

"The economic data is absolutely disastrous and the profit outlook isn't so great either and yet we've seen this big rebound in the markets," Terri Spath, at Sierra Investment Management, said.

"The reality is that the Fed has proclaimed that they are going to keep the printing presses rolling, they will print money and it has created this all-you-can-eat buffet.

"The data doesn't support this and so expect volatility, expect drawdowns going forward. The bottom may be in for the year, but we do expect volatility in the future."



Trump Touts ‘Done’ Deal with Beijing on Rare Earths, Chinese Students

In this photo released by Xinhua News Agency, Chinese Vice Premier He Lifeng, right, shakes hands with US Treasury Secretary Scott Bessent before their meeting to discuss China-US trade, in London, Monday, June 9, 2025. (Xinhua via AP)
In this photo released by Xinhua News Agency, Chinese Vice Premier He Lifeng, right, shakes hands with US Treasury Secretary Scott Bessent before their meeting to discuss China-US trade, in London, Monday, June 9, 2025. (Xinhua via AP)
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Trump Touts ‘Done’ Deal with Beijing on Rare Earths, Chinese Students

In this photo released by Xinhua News Agency, Chinese Vice Premier He Lifeng, right, shakes hands with US Treasury Secretary Scott Bessent before their meeting to discuss China-US trade, in London, Monday, June 9, 2025. (Xinhua via AP)
In this photo released by Xinhua News Agency, Chinese Vice Premier He Lifeng, right, shakes hands with US Treasury Secretary Scott Bessent before their meeting to discuss China-US trade, in London, Monday, June 9, 2025. (Xinhua via AP)

US President Donald Trump touted ties with China as "excellent" on Wednesday, saying the superpowers reached a deal after two days of talks aimed at preserving a truce in their damaging trade war.  

Trump said on his Truth Social platform that China would supply rare earth minerals and magnets -- vital elements for American industries -- while Washington would allow Chinese students to remain in US universities.  

His post came after top United States and Chinese negotiators announced a "framework" agreement late Tuesday following two days of marathon talks in London. 

"Our deal with China is done," Trump wrote, adding that the agreement was still "subject to final approval with President Xi (Jinping) and me." 

"President XI and I are going to work closely together to open up China to American Trade," he said in a second post. "This would be a great WIN for both countries!!!"  

US stock markets showed little enthusiasm despite Trump's statements, but major indexes edged higher in early trading.  

- 'Candid' talks -  

US Treasury Secretary Scott Bessent said Wednesday that it was possible to rebalance economic relations with China if Beijing proved a "reliable partner in trade negotiations."  

"If China will course-correct by upholding its end of the initial trade agreement we outlined in Geneva, and I believe after our talks in London they will, then the rebalancing of the world's two largest economies is possible," Bessent told lawmakers at the House Ways and Means Committee.  

The two sides agreed to reduce their tit-for-tat, triple-digit tariffs during talks in Geneva last month, but cracks appeared in the detente after Trump accused China of violating the deal.  

Washington was concerned at slower supplies of rare earths after Beijing in early April began requiring domestic exporters to apply for a license -- widely seen as a response to US tariffs.  

Rare earths are used in everything from electric vehicles to hard drives, wind turbines and missiles.  

US Commerce Secretary Howard Lutnick said in London on Tuesday that US measures imposed when rare earths "were not coming" would likely be relaxed once Beijing moved forward with more license approvals.  

On Truth Social, Trump said China will supply "full magnets, and any necessary rare earths" up front.  

Washington has infuriated Beijing by vowing to revoke the visas of Chinese students, a major source of revenue for US universities.  

On Wednesday, Trump said: "We will provide to China what was agreed to, including Chinese students using our colleges and universities."  

The US president also said that the United States applies 55 percent tariffs on Chinese goods -- a combination of his 30 percent additional levies this year and the rough average of pre-existing duties, a White House official said.  

He said Beijing charges 10 percent duties on US goods.  

The rates are the same as those that were previously agreed in the truce, which temporarily brought US tariffs down from 145 percent and those imposed by China from 125 percent.  

In a Chinese state media readout of the talks released Wednesday, Vice Premier He Lifeng, who headed Beijing's team in London, stressed the need for the two sides to strengthen cooperation in future dialogue.  

"As a next step, the two sides should... continuously enhance consensus, reduce misunderstandings and strengthen cooperation," He said, according to state broadcaster CCTV.  

Speaking to reporters in London, China International Trade Representative Li Chenggang earlier said: "Our communication has been very professional, rational, in-depth and candid."