Commodities Daily - July 10, 2020

> Gold comes under pressure during US trading hours. Gold lost 0.3% yesterday in the wake of fairly strong US initial jobless claims data. Risk appetite is on the wane today amid a rise in coronavirus deaths in Florida and Texas and news that the US is preparing new duties on up to $700 mln worth of French imports. Gold is likely to track the stock markets and could prove unable to stick at around $1,800/oz. Today's data calendar includes the US PPI for June (15:30 Moscow time).> Base metal prices consolidate after strong two-week rally. We close our recommendation to buy copper in rubles, although investment demand for copper in dollars remains high. Yesterday, the London Metal Exchange (LME) began publishing off-warrant inventory reports, which show that as of end-May inventories of aluminum and copper, which may be put under LME warrant in the future, totaled a respective 1 mln tonnes and 161k tonnes. Prices on 3m forwards are trading at around $6,270/tonne for copper, $1,660/tonne for aluminum and $13,125/tonne for nickel.GOLD COMES UNDER PRESSURE DURING US TRADING HOURSGold held firm in the $1,810-1,815/oz range yesterday morning but was turned around by the release of US jobless claims. Initial claims fell to a 15-week low of 1.31 mln, beating the consensus forecast of 1.38 mln and offering a significant improvement from the previous week's figure of 1.41 mln. The data helped to push gold down sharply at the opening in New York, and it reached as low as $1,798/oz. Gold was highly correlated with equity markets, which were dominated by souring sentiment. Late in the evening, reports emerged that the US was preparing new duties on up to $700 mln worth of French imports, investors remained wary of the second wave of the coronavirus in the US, as the death rates in Florida and Texas continued to climb.Today's data calendar includes the US PPI for June (15:30 Moscow time). We believe gold will fail to hold around the $1,800/oz, while the next technical support level stands at $1,791/ SE METAL PRICES CONSOLIDATE AFTER STRONG TWO-WEEK RALLY.We close our recommendation to buy copper in rubles, although investment demand for copper in dollars remains high (CFTC data and LME data on the commitments of traders' positions attest to this). Since we issued the recommendation, copper prices in ruble terms are up nearly 13% despite the high volatility in both the ruble and in copper prices. A significant rally in copper prices began at the beginning of April, which was largely predicated on the rapid recovery being seen at the time in China's economy and also the spread of the virus in South American countries such as Chile and Peru, which are leading copper producers. Another supporting factor was the initiatives announced during China's National People's Congress in late May.Copper closed yesterday at $6,300/tonne, which we do not think fully reflects the ongoing fundamental risks facing the refined copper market - namely, the risk of a global surplus due to a drop in developed markets (we forecast the global surplus at 300-400 kt this year), and also the risk of a second wave of the virus. As a result, we recommend that investors take profit right now, particularly since our FX strategy team expects the ruble to strengthen later this month and in August. Yesterday, the London Metal Exchange (LME) began publishing off-warrant inventory reports, which show that as of end-May inventories held privately in LME-registered warehouses or in a storage contract that allows for delivery to the bourse at a later date totaled 1 mln tonnes of aluminum and 161k tonnes of copper. However, this report did not affect prices even though the undisclosed inventories were a significant addition to the figures officially reported earlier (1.63 mln tonnes for aluminum and 185k tonnes of copper).Market sentiment is cautious today. Prices on 3m forwards are trading at around $6,270/tonne for copper, $1,660/tonne for aluminum and $13,125/tonne for nickel. Today at 15:30 Moscow time Shanghai Exchange inventory data will be