Commodities Daily - February 18, 2020

> Gold prices rising as coronavirus effect on corporate earnings in focus. The market was quiet for most of the day yesterday. But late in the evening, Apple put out a press release warning that it would miss its 1Q20 earnings guidance, attributing that to the coronavirus situation. In addition, the WSJ reported that the US was limiting certain technology exports to China. This has unnerved markets and supported gold this morning. The Empire State Manufacturing Survey, UK employment and the German ZEW indexes will be released today. We expect gold to push higher to $1,590-1,595/oz, with safe-haven demand remaining strong.> Base metal prices under pressure even though China's loan prime rate could be cut this week. Even reports that clinical trials of a drug to treat the virus have begun in Wuhan have not done much to buoy base metal prices. Furthermore, issues in certain markets are starting to come into sharper focus. There are reports that Chinese copper companies are facing a buildup of sulfuric acid stocks and are even paying to have it shipped away. This morning, 3m forwards on copper and nickel are down about 0.4% each, while zinc is down around 0.6%.GOLD PRICES RISING AS CORONAVIRUS EFFECT ON CORPORATE EARNINGS IN FOCUSWithout major news, gold consolidated around the $1,580/oz mark yesterday. But late in the evening, Apple put out a press release warning that it would miss its 1Q20 earnings guidance, attributing that to the coronavirus situation. In addition, the WSJ reported that the US was limiting certain technology exports to China. This has unnerved markets and helped gold to add $6/oz at the open in Asia today. As we write, it is quoted at $1,589.It looks like safe-haven demand will remain strong today. The Empire State Manufacturing Survey, UK employment and the German ZEW indexes will be released. We expect gold to push higher to $1,590-1,595/ SE METAL PRICES UNDER PRESSURE EVEN THOUGH CHINA'S LOAN PRIME RATE COULD BE CUT THIS WEEKEarly in the day yesterday, base metal prices advanced thanks to support from the PBoC and optimism stemming from the lower number of new coronavirus cases. In the coming days, data on new loans in China and statistics on rates for 1y and 5y loans will be released. Meanwhile, pessimism has returned to markets today (see our gold comment above). Comments from both the Moody's rating agency and the president of South Korea that the decreased demand and interruptions of supply chains have already led to a significant slowdown in economic growth in the region. Meanwhile, issues in certain markets are starting to come into sharper focus. Today, Bloomberg reported that major Chinese copper companies are facing rising stocks of sulfuric acid, a by-product of copper smelting, which they are unable to sell in the market and unable to ship elsewhere due to logistical issues. Even though they are even willing to pay ($4.29/tonne) to have it removed, there has been such a buildup that some smelters are being forced to cut output.This morning, 3m forwards on copper and nickel are down about 0.4% each, while zinc is down around 0.6%. If the risk-off sentiment stays in place today, base metal prices may well decline