Commodities Daily - June 21, 2019

> Oil prices climb on US-Iran escalation, weaker dollar and surging stock markets; PMI data on the radar today. The Middle East tensions and preliminary June PMIs (in the eurozone and US) are likely to be the key events for global markets today. We think that a poor US reading could be seen supporting the Fed's dovish stance, justifying rate cuts, and thus turn out negative for the dollar but positive for stock markets and oil prices. We expect Brent to most likely secure above $65/bbl later in the day as risks look skewed to the upside. Investors are also eyeing US existing home sales and the Baker Hughes rig counts. We note that this morning Nikkei has reported (citing an unidentified source) that Trump and Xi could meet over dinner on June 29.> Escalation in US-Iran tensions sends gold briefly above $1,410/oz. Overnight Moscow time, the US media reported that President Donald Trump had authorized military strikes against Iran due to the downing of an American surveillance drone, but then called them off shortly before the planned launch. This triggered a $23/oz rise in gold prices within just a few hours, though gold has since eased back to $1,388/oz.> Base metals down this morning amid strengthening dollar, growing geopolitical risks. Yesterday, the mood in the base metals markets was generally upbeat following the dovish outcome to the Fed meeting, though sentiment has soured this morning. The International Aluminum Institute reported yesterday that global aluminum output was relatively stable in May, with production up 1% m-o-m in China. The strike at the Codelco copper mine in Chile continues.