Commodities Daily - June 4, 2019

> Oil price rally on upbeat Saudi comments halted by slowing US manufacturing growth; Fed comments eyed. The US manufacturing PMI in tandem with slowing factory activity in Europe and Asia last month amid escalating trade wars reignited fears of a global recession. This weighed on risk sentiment. All eyes are now on central banks to step up support by easing monetary policy, possibly even cutting rates. Today, Fed Chairman Jerome Powell and four regional Fed presidents are scheduled to deliver remarks, which we think will set the tone for the day. We think that dovish rhetoric is likely, which would support risk sentiment and help Brent to move higher toward $62/bbl later in the day.> Gold's safe-haven rally getting additional support from dollar weakness; comments by Powell today eyed. Given the continuing slowdown of global economic growth, the subdued level of inflation in the US, the uncertainty regarding the US-China trade war and the fact that markets are pricing in four Fed rate cuts by the end of 2020, as well as Fed representative James Bullard's comments yesterday, our FX analysts think that it is rather likely that Fed Chairman Jerome Powell will be quite dovish in his speech later today. Although a cut next week is out of the question, the Fed may lay the groundwork for one in July-September if the situation continues to deteriorate. Thus, the dollar is likely to retreat further today, which we believe could result in gold moving to as high as $1,335-1,340/oz.