Commodities Daily - February 14, 2020

> Gold trades around the $1,575/oz level; US data to the fore today. Gold climbed $10/oz yesterday morning and consolidated around $1,571-1,577/oz for the rest of the day after China reported a jump in coronavirus casualties. Market sentiment was buoyed by US inflation and initial jobless claims data. Today, US retail sales, industrial production and the University of Michigan consumer sentiment index are due. We think positive data could push gold down to $1,560-1,565/oz.> Base metal prices up on the day yesterday, with nickel and zinc the best performers. The US and China are to cut import tariffs today under the phase one trade deal, which we expect to be neutral for prices. A more positive coronavirus news flow is being offset this morning by big builds in Shanghai Exchange weekly inventories, with copper up 27%, zinc 24% and aluminum 12%.GOLD TRADES AROUND THE $1,575/OZ LEVEL; US DATA TO THE FORE TODAYGold firmed $10/oz yesterday morning following an increase in reported coronavirus cases in China. Sentiment has improved today, as the number of new infections has slowed again, though gold remains elevated at $1,575/oz.Yesterday's US macro releases boosted market confidence that a rate cut is unlikely at the next Fed meeting. Initial jobless claims (205k) came in below the consensus forecast (210k), while inflation reached 2.5% y-o-y, the highest level since 2018 (and above the consensus forecast of 2.4%). The data had a modest impact on gold, due, we think, to comments by ECB Chief Economist Philip Lane and the Fed's Robert Kaplan that central banks stand ready to support their economies in the face of the coronavirus threat.US retail sales, industrial production and the University of Michigan consumer sentiment index are due today. We think positive data could push gold down to $1,560-1,565/ SE METAL PRICES UP ON THE DAY YESTERDAY, WITH NICKEL AND ZINC THE BEST PERFORMERSBase metal prices remain very sensitive to coronavirus news. The mood currently seems moderately optimistic, as the latest official statistics seemed to point to a slower spread of the virus, while Chinese state media are reporting that a therapy has been developed to treat the virus, with the first test results positive. On the day yesterday, the 3m forward contract for copper added 0.45%, aluminum 0.60%, nickel 1.4% and zinc 1.3%. Early gains in quotes this morning were limited by data on inventories at the Shanghai Exchange for the week ending today. The data showed builds in inventories of copper (+27%), zinc (+24%) and aluminum (+12%), whereas nickel stocks decreased by 1.1%. As this past week was the first one since companies re-opened following the extended holiday, the data sparked concerns over the consumption outlook for China and fears that a surplus will develop in Asia. Today, mutual tariff reductions by the US and China under the phase one trade deal are to take effect. However, we expect this to have only a neutral impact on base metals. What seems most likely at this point is that China will end up being unable to fully meet its commitments to purchase US goods. Although the White House has reported that Chinese President Xi Jinping assured Donald Trump that China would stick to its commitments under the trade deal in full, the time frames will likely have to be reviewed in