Beijing Steps Back, Markets Step Up

Washington and Beijing have just taken a big step toward easing trade tensions. US Treasury Secretary Scott Bessent has confirmed that China will resume large purchases of American soybeans. It will also be delaying its expansion of rare earth export licensing for at least a year. This agreement is happening before another expected agreement between President Donald Trump and Chinese President Xi Jinping at the APEC summit in South Korea. The meeting could be the most significant thawing in relations since earlier this year.

China’s renewed appetite for US soybeans is a clear political gesture but also an economic one. The resumption of large orders is expected to lift American agricultural exports and ease tensions with one of the country’s most critical trading partners. For global markets, it sends a signal that both sides are more interested in short-term stability than escalation. That typically softens safe-haven demand, and gold often feels that first. When trade peace appears closer, investors tend to edge back toward equities and industrial commodities, trimming positions in defensive assets like bullion.

The rare earth decision may be even more telling. Beijing is easing pressure on the high-tech and defence industries that depend on its materials by postponing controls on exports. Rare earths are used in electric vehicles, renewable energy components and other electronics. Any restriction on them could have triggered a wider reaction in commodity markets. Avoiding that confrontation gives manufacturers and markets breathing space and hints that China prefers negotiation to confrontation for now. The US has also held back from new tariff measures that were ready to activate if China had moved ahead with its curbs.

For gold and silver investors, this shift may provide a buying opportunity since the big picture remains the same. Central banks are hesitant to cut too strongly and send inflation through the roof, and deficits in the US and Europe are looking problematic. Those forces continue to support long-term demand for precious metals.

In Australia, the reaction could play through the currency. A more positive global risk tone often supports the Aussie dollar, which can slightly lower the local gold price in AUD terms. That might provide short-term buying opportunities for local investors who have been waiting for a dip. Silver, with its industrial role, could see less immediate downside since stronger trade conditions tend to support its manufacturing demand base even when risk sentiment improves.

Ultimately, while a trade breakthrough may cool some of gold’s immediate momentum, the underlying case for holding bullion as protection against policy uncertainty and long-term currency debasement remains. Trump's negotiating style has been notoriously volatile, so only time will tell if current agreements hold. Traders will be watching whether this goodwill between Washington and Beijing can last through the next round of negotiations or whether negotiations fall apart as fast as they've come together.