Commodities Daily - August 3, 2021

> Oil slides amid demand threat from new coronavirus strain, downbeat US and China manufacturing PMIs. This morning, Brent is trading around $73/bbl, with virus concerns remaining the main factor as some governments have reinstated or extended curbs. Investors are also eying US June factory orders, July vehicle sales and the API weekly oil and refined products inventory data. In our view, today Brent should remain bound in a $72.30-73.45/bbl range, which is the 50-day moving average, amid a lack of bullish catalysts and the persisting demand risks - only the overnight US inventory data looks able to inject optimism.> Gold steady as dollar trades sideways. Gold traded sideways near $1,815/oz yesterday, while EUR/USD was range-bound in the 1.186-1.189 corridor. The macro data was mixed. Gold is trading near $1,810/oz as we write. Today, the market awaits eurozone PPIs and US factory orders, both for June. We expect gold to trade in the $1,800-1,820/oz corridor today.OIL SLIDES AMID DEMAND THREAT FROM NEW CORONAVIRUS STRAIN, DOWNBEAT US AND CHINA MANUFACTURING PMISEarly yesterday, Brent slid $1.20/bbl to $74.10/bbl after the official and then the Caixin PMI showed that Chinese factory activity had expanded in July at a very slow pace, coming up short of the consensus estimates, as higher raw material costs, equipment maintenance and extreme weather weighed on activity. We note that high raw material costs have eaten into the profitability of industrial firms and deterred some Chinese exporters from taking on orders, while the authorities are keen to prevent the high factory-gate prices from being passed on to consumers. Brent then began to consolidate yesterday around the $74.50/bbl mark and traded there during the European session, with support coming from the July eurozone manufacturing PMI - the reopening of the economy has led demand to rocket, though supply bottlenecks have sent input costs soaring. The upbeat print follows official data from Friday, when eurozone 2Q21 GDP growth came in higher than expected, the economy coming out of a recession. Later on yesterday, following the start of the US session Brent plummeted $2.50/bbl to $72.30/bbl. The trigger was the US ISM manufacturing PMI, which showed that US manufacturing activity grew at a slower pace in July for the second straight month as raw material shortages persisted (though there are signs of some easing in supply-chain bottlenecks). Also weighing on prices yesterday were growing worries about oil demand amid the spreading of the Delta coronavirus strain. Today saw 61 confirmed cases in China, discovered in several regions and in Beijing, whence residents were advised not to leave.This morning, Brent is trading around $73/bbl, with virus concerns remaining the main factor as some governments have reinstated or extended curbs. Investors are also eying US June factory orders, July vehicle sales and the API weekly oil and refined products inventory data. In our view, today Brent should remain bound in a $72.30-73.45/bbl range, which is the 50-day moving average, amid a lack of bullish catalysts and the persisting demand risks - only the overnight US inventory data looks able to inject LD STEADY AS DOLLAR TRADES SIDEWAYSGold hovered around $1,815/oz yesterday, while EUR/USD was range-bound in the 1.186-1.189 corridor, limiting the price movements of bullion. The US 10y yield also declined, from 1.22% to 1.18%. The macro data, meanwhile, was mixed. The eurozone manufacturing PMI for July was upbeat at 62.8 (consensus 62.6). That created moderate support for bullion on the back of a firming euro. In the US, the IHS Markit PMI for July printed 63.4, slightly above the 63.1 consensus, which exerted moderate pressure on bullion. However, more important for the US market is the ISM report, the manufacturing PMI index for which came in at 59.5 points (consensus: 61). The report also showed growth in both demand and consumption in July, while input production volumes grew at a slower pace than in June. Although bullion tried to advance on that report, it failed to consolidate near $1,820/oz and eventually slid to near $1,815/oz.Gold is trading near $1,810/oz as we write. Today, the market awaits eurozone PPIs and US factory orders, both for June. For the former, the market expects 1.4% m-o-m growth (after 1.3% growth in May), while US factory orders are expected to grow at 1% in June. That may create moderate pressure on bullion, although we don't expect significant movements a day before tomorrow's ADP employment report, which is highly anticipated ahead of the US labor market report in Friday. We expect gold to trade in the $1,800-1,820/oz corridor