Commodities Daily - July 30, 2021

> Oil rose yesterday amid global rally despite weak US GDP print. This morning, Brent slid toward $75.5/bbl as risk sentiment turned sour amid rising Covid infections across the globe and renewed curbs on movement in some countries, most notably in Southeast Asia, where most people remain unvaccinated. Today, investors will eye preliminary 2Q21 GDP data and July CPI data from the eurozone, along with the June personal income and spending report and the monthly EIA-914 oil and gas production report from the US. In our view, expectedly upbeat macro data could support risk sentiment later in the day, after this morning's selloff, helping Brent rebound to back above $76/bbl.> Gold rallies as US data comes in short of expectations. Gold jumped from $1,810/oz to $1,830/oz yesterday despite the fact that the US 10y Treasury yield rose from 1.23% to 1.28%. The US macroeconomic data published yesterday came in below expectations, creating major tailwinds for gold in the wake of Fed Chairman Powell's dovish remarks on Wednesday. During the Asian session this morning, gold has remained near $1,830/oz. Today, the market awaits US PCE inflation for June, personal income and spending for June, and the July University of Michigan consumer sentiment index, as well as eurozone preliminary GDP for 2Q21, CPI for July and June unemployment. We expect gold to test resistance at $1,835/oz today.OIL ROSE YESTERDAY AMID GLOBAL RALLY DESPITE WEAK US GDP PRINTAfter trading near $74.6/bbl early yesterday, Brent began to generate positive momentum as the dollar weakened and major stock market indexes trended higher. Ahead of the US 2Q21 GDP release, Brent managed to reach $75.5/bbl, before sliding to $75.0/bbl. US GDP expanded at a 6.5% annualized rate in 2Q21 following revised growth of 6.3% in 1Q21, missing the considerably higher consensus estimate of 8.5%. The negative surprise was mostly due to the inventory component, while the personal consumption component strongly exceeded forecasts, as Americans had the chance to ramp up their spending on restaurants and other services in the quarter. The vaccinations, government aid and further reopening of the economy helped drive an 11.8% gain for the consumption component, the second largest since 1952. Given that the 2Q21 GDP report was actually stronger than the headline figure suggested, risk sentiment recovered from an initial dip following the release, with Brent and the S&P 500 climbing higher. The yield on 10y US Treasury notes also rose, while the dollar weakened, on expectations that the GDP data could encourage the Fed to maintain its economic support measures for longer. All in all, the report underscored the robust bounce-back in household demand, as well as the trouble companies are having keeping pace with demand. Applications for US state unemployment also fell last week, signaling that the labor market continues to improve even as the Delta variant of Covid-19 rages amid persisting vaccine hesitancy. As a result, Brent rallied $1.5/bbl to as high as $76.15/bbl. It eventually settled at $76.05/bbl, $1.31/bbl above the previous settlement.This morning, Brent slid toward $75.5/bbl as risk sentiment turned sour amid rising Covid infections across the globe and renewed curbs on movement in some countries, most notably in Southeast Asia, where most people remain unvaccinated. Today, investors will eye preliminary 2Q21 GDP data and July CPI data from the eurozone, along with the June personal income and spending report and the monthly EIA-914 oil and gas production report from the US. In our view, what should be upbeat macro data could support risk sentiment later in the day, after this morning's selloff, helping Brent rebound to back above $76/bbl. The personal income and spending report is likely to show a third consecutive drop in total income amid the roll-back in government aid, though wages and consumption should rise. We note that the September Brent futures contract expires today and that the prompt calendar spread remains $1/bbl in LD RALLIES AS US DATA COMES IN SHORT OF EXPECTATIONSGold jumped from $1,810/oz to $1,830/oz yesterday despite the fact that the US 10y Treasury yield rose from 1.23% to 1.28%. At the same time, EUR/USD edged up from 1.185 to 1.189. The US macroeconomic data published yesterday came in below expectations, creating major tailwinds for gold in the wake of Fed Chairman Powell's dovish remarks on Wednesday. In particular, US annualized GDP grew 6.5% Q-o-Q in 2Q21 versus an 8.5% jump expected, though the level of US output is 0.8% higher than at its peak in 4Q19. Meanwhile, the 1Q21 GDP print was revised a touch lower, with growth now seen at 6.3% versus 6.4% previously. In addition, weekly US initial jobless claims again came in above expectations at 400k versus the 385k consensus. US pending home sales were expected to be flat m-o-m, but they came in down 1.9%. Fueled by what looked to be signs of a slowing US economic recovery and the Fed's dovish outlook, bullion consolidated slightly below $1,830/oz, yet above its 100-day and 200-day moving averages. During the Asian session this morning, gold has remained near $1,830/oz. Today, the market awaits US PCE inflation for June, personal income and spending for June, and the July University of Michigan consumer sentiment index, as well as eurozone preliminary GDP for 2Q21, CPI for July and June unemployment. The consensus sees the US PCE deflator rising 0.6% m-o-m and 4.0% y-o-y, while eurozone GDP growth is expected at 1.5% Q-o-Q. We expect gold to test resistance at $1,835/oz