Commodities Daily - June 18, 2021

> Oil prices fall after Fed meeting amid broader commodity slump. Later on yesterday Brent pared back some of its earlier losses and is trading near $73/bbl mark this morning ahead of a rather uneventful day, with the weekly Baker Hughes rig count being the only notable event for the oil market. We think that yesterday Brent established strong support at $72/bbl and is unlikely to break below this level today, even if the broader commodity selloff continues. The oil market is continuing to display signs of strength as the pandemic ebbs globally. We see Brent as most likely to keep trading near $73/bbl for now with resistance at $74.5/bbl.> Gold extends losses despite decline in Treasury yields. Gold sank from $1,810/oz to $1,770/oz yesterday after Fed officials brought forward their monetary policy tightening plans. However, the 10y Treasury yield slid to 1.51% yesterday and US data came in worse than expected. Gold has recovered somewhat as we write and is trading near $1,785/oz. We expect it to trade within the $1,770-1,800/oz range today amid a lack of macro data.OIL PRICES FALL AFTER FED MEETING AMID BROADER COMMODITY SLUMPYesterday, Brent slumped $2.5/bbl to as low as $72/bbl a day after the Federal Reserve signaled that it could start moving away from its ultra-accommodative monetary policy. This buoyed the dollar, which had the effect of reducing the appeal of commodities priced in the currency. Fed Chairman Jerome Powell said the central bank would begin discussing scaling back its massive QE program, which is the first major hawkish turn from the central bank since the start of the pandemic. It is also the first step toward normalizing monetary policy prior to a rate hike. The Fed's updated dot plot shows two interest-rate increases by the end of 2023, which is sooner than many thought. This in turn helped to boost the dollar and US bond yields. It is important to highlight that following this year's commodity boom, some markets have now wiped out gains for the year and several more are close to doing so, including soybeans, corn, wheat, platinum, nickel, sugar, cotton and even lumber. Crude oil, meanwhile, has held up rather well amid this selloff, which underscores how unevenly the commodity complex is responding to economies reopening and expanding once again. While oil draws support from strong demand fundamentals, other commodities face their own unique headwinds, such as easing supply worries in soybeans and monetary policy uncertainty in the case of gold and silver.Also providing headwinds for oil are the latest remarks from Iranian officials that point to the fact that a nuclear deal is close to being revived, sparking concerns about a potential flood of crude exports from the Islamic Republic. Iranian Deputy Foreign Minister Abbas Araghchi said that fundamental issues still remain to be negotiated and that negotiators will continue talks regardless of the country's June 18 election. As we noted in our previous reports, Tehran probably won't be able to boost production or release stored supplies until 4Q21.Later on yesterday Brent pared back some of the earlier losses and is trading near $73/bbl mark this morning ahead of a rather uneventful day, with the weekly Baker Hughes rig count being the only notable event for the oil market. We think that yesterday Brent established strong support at $72/bbl and is unlikely to break below this level today, even if the broader commodity selloff continues. The oil market is continuing to display signs of strength as the pandemic ebbs globally. We see Brent as most likely to keep trading near $73/bbl for now with resistance at $74.5/ LD EXTENDS LOSSES DESPITE DECLINE IN TREASURY YIELDSGold lurched down from $1,810/oz to $1,770/oz yesterday despite the 10y Treasury yield sliding to 1.51%. EUR/USD eased to 1.29, creating an additional headwind for bullion. US macro data was positive for gold. Initial jobless claims showed the first increase in seven weeks at 412k, which was above the 360k consensus. That could signal the labor market recovery is weakening and for a short time it created modest support for gold. The Philadelphia Fed business outlook for June also signaled a slowdown in the recovery, coming in at 30.7 points, below the consensus of 31. The US leading index for May was in line with expectations at 1.3% and had no impact on gold. The Eurozone CPI for May was also in line with expectations at 2% y-o-y and 0.3% m-o-m. In the wake of the FOMC meeting, markets remain worried over the Fed's timing with regard to tapering its $120 bln bond-buying program. That kept gold under significant pressure yesterday. Gold has recovered slightly to $1,785/oz as we write. Today, the market is without significant macro data. We expect gold to remain in a $1,770-1,800/oz corridor