Commodities Daily - July 3, 2020

> Oil prices rise on upbeat US macro data, but surge in new coronavirus cases caps gains. Today, the US markets will be closed in light of tomorrow's Independence Day, meaning volumes will likely be reduced globally. We think that at best, Brent could attempt to break above technical resistance at $43.3/bbl today and fall short of the next resistance level at $43.8/bbl.> Gold stable, consolidating around the $1,775/oz mark. US markets are closed today, so we do not expect to see the type of volatility we observed yesterday after the publication of the June jobs report in the US. Yesterday's employment data pointed to a continued brisk recovery in the US labor market amid the ease of lockdown measures, which caused gold to plunge around $20/oz to as low as $,1758/oz. However, gold was able to stage a recovery and closed near $1,775/oz.OIL PRICES RISE ON UPBEAT US MACRO DATA, BUT SURGE IN NEW CORONAVIRUS CASES CAPS GAINSFront-month Brent was trading at around $42/bbl yesterday morning but started to climb and reached an intraday high of $43.2/bbl near to the close. It eventually settled at $43.14/bbl, up $1.11/bbl on the day. One supportive factor at play was news of success in an early trial of a possible coronavirus vaccine made by Pfizer. Ahead of the US trading session, investors were digesting better than expected US nonfarm payrolls data for June and looking to price in a faster rebound for the US economy. US private payrolls rose by 4.8 mln in June and the May figure was revised up to 2.7 mln, beating the consensus estimates. However, weekly jobless claims rose 59,000 to 19.290 mln in the week to June 20. The unemployment rate fell for a second month, dropping 2.2 pp to 11.1%, still way above the pre-pandemic level. Yesterday's data showed that the US labor market in June appeared to be on track toward a V-shaped recovery as the economy opened up again. However, a recent pickup in the infection rate places a new question mark over the pace of the recovery. Reuters reported that new infections in the US jumped by more than 50,000 yesterday, setting a new record for a third consecutive day. Brazil is the only other country to report more than 50,000 new cases in a single day. The market will keep a close eye on gasoline demand as the US heads into its July 4 holiday weekend, when many Americans usually hit the road. However, this seasonal demand uptick could be undermined by spiking infections in large parts of the country, including highly-populated states such as California, Florida and Texas, which have had to scale back or pause the reopening of their economies and send some workers back home. We think the positive surprise in the June jobs report indicates that the country's economic fundamentals remain strong enough to facilitate a relatively robust recovery, but only once Covid-19 is under control. This implies that once the infection rate begins to improve, investors will likely brace for a further wave of risk-on sentiment, which would provide strong support for oil.Another important development that could provide strong support for oil over the medium term is the possible extension through August of the current 9.6 mln bpd OPEC+ production cuts. As of now, the cuts are set to ease to 7.7 mln bpd from August to December and then to 5.7 mln bpd from next year until April 2022. Russian Energy Minister Alexander Novak yesterday cautioned against changing the plan. We think this suggests that the next OPEC+ JMMC video conference on July 15 could be heated, with many likely to advocate for another monthly extension amid the spike in Covid-19 cases in the US and Latin America. Today, the US markets will be closed in light of tomorrow's Independence Day, meaning volumes will likely be reduced globally. We think that at best, Brent could attempt to break above technical resistance at $43.3/bbl today and fall short of the next resistance level at $43.8/ LD STABLE, CONSOLIDATING AROUND THE $1,775/OZ MARKVolatility in the gold market remained high yesterday, especially in the latter part of the day following the publication of US jobs data. The June employment report showed a sizable 4.8 mln increase in nonfarm payrolls (the consensus was 3.23 mln), with sharp upticks in employment in sectors such as the hotel business and retail thanks to the lifting of lockdown measures. The unemployment rate fell to 11.1%, which was well above the expected 12.5% but still far below the pre-pandemic level of 3.6%. The strong jobs data pushed gold prices as low as $1,758/oz, but quotes began to recover rather quickly amid persisting demand for defensive assets.This morning, gold has been stable, consolidating around the $1,775/oz mark. With US markets closed for a holiday, we do not expect to see sharp price swings