Oil Leads Commodity Rally After US-China Truce as Gold Retreats

Bloomberg News

Mon, May 12, 2025, 1:21 AM 2 min read

(Bloomberg) -- Oil, base metals and crop commodities rallied while gold fell after China and the US agreed to lower tariffs on each other, following a weekend of trade talks.

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Brent crude added as much as 3.7% in London and copper rose 1.4%. European natural gas, soybeans and iron ore also rallied. Shares of the top mining companies surged. Meanwhile, bullion fell as haven demand eased.

The truce between the world’s two largest economies brings relief to commodity markets roiled by prohibitive tariffs that dented the outlook for global growth in past weeks. Oil watchers have been slashing their demand forecasts and there have been signs in recent weeks that the trade war is already hitting the amount of goods arriving in the US.

China will reduce its tariffs on US goods to 10% from a level that climbed to 125% when the two nations began placing retaliatory restrictions on one another. The reduction will last for 90 days, while the US will reduce its own curbs to 30% from 145%.

At a briefing after the talks, US Treasury Secretary Scott Bessent said neither nation wanted their economies to decouple. In a statement, the two countries said they would establish a mechanism to continue discussions about economic and trade relations.

The announcement came after a weekend of talks in Geneva involving Bessent, US Trade Representative Jamieson Greer and their Chinese counterparts.

The lower levies are “reducing fears of a prolonged economic fallout hurting demand,” said Ole Hansen head of commodities strategy at Saxo Bank. “The key question is whether today’s news marks peak optimism, given the low likelihood of a full U.S. retreat from its stance on China.”

Oil prices are still down 13% since early April as the crude market also contends with rising supplies from the Organization of the Petroleum Exporting Countries and its allies.

Shares of top miners including Glencore Plc and Rio Tinto Plc rose more than 5% in London. Miners also led gains in Europe’s equity markets.

Copper prices, which fell sharply after tariffs were first announced, have rebounded strongly on signs that demand is holding firm in China for now.

Soybean futures in Chicago extended gains after the announcement, trading at the highest since late April. China is the world’s top soybean buyer and the thaw could help re-open stalled crop flows between the nations. Cotton futures also jumped, rising as much as 2.7%.