Commodities Daily - May 24, 2021

> Oil pares losses from early in week on upbeat US data despite rising chances of Iranian barrels returning. This morning, Brent is carrying through Friday's positive momentum and is trading near $67/bbl. No major data releases are scheduled for today, while talks between Iran and world powers are to continue in Vienna this week. Amid a lack of macro and fundamental catalysts, Brent is most likely to keep trading within a $66-67/bbl range today.> Gold gains as Treasury yields hold steady. Gold rose to $1,880/oz on Friday as the 10y US Treasury yield consolidated near 1.62%. The US and eurozone services PMI readings were rather upbeat, the US gauge printing at the highest level on record. During the Asian session today, gold was trading near $1,885/oz. Today's fairly light macro agenda features the Chicago Fed National Activity Index. Overall, we think bullion is likely to trade sideways in a range of $1,875-1,890/oz today.OIL PARES LOSSES FROM EARLY IN WEEK ON UPBEAT US DATA DESPITE RISING CHANCES OF IRANIAN BARRELS RETURNINGOn Friday, Brent rallied from $64.5/bbl to $66.5/bbl amid further signs that the US economy is rapidly bouncing back from the pandemic, which outweighed concerns about a supply increase should the Iranian nuclear deal be revived. However, it was upbeat eurozone IHS Markit preliminary PMIs for May that initially boosted sentiment. European business growth recorded its fastest pace in more than three years, as the vaccine rollout has picked up and more service sector businesses have reopened, and the composite PMI came in at 56.9 versus April's 53.8. Later on, the IHS Markit US composite PMI showed a strong m-o-m jump in May to 68.1 from 63.5 in April. IHS Markit highlighted that the rate of expansion of business activity was well above anything in recent memory. The upbeat data, however, also underscored inflation worries, with average selling prices for goods and services rising at high rates, which is expected to feed through into higher consumer inflation in the coming months.This morning, Brent is carrying through Friday's positive momentum and is trading near $67/bbl. No major data releases are scheduled for today, while talks between Iran and world powers are to continue in Vienna this week. According to senior Iranian officials, Iran is likely to extend an agreement for UN nuclear inspections, which is expected to buy time to negotiate the nuclear deal (meaning the official return of Iranian barrels to world oil markets). This will also surely be a key point on the agenda during the OPEC+ ministerial meeting on June 1. Another developing negative factor for oil prices is intensified Chinese government measures to temper raw materials price growth and reduce speculation as global commodities are rising to record highs. We highlight that the PBoC, wary of inflating asset bubbles, has also been restricting the flow of money to the economy since last year, though only gradually to avoid derailing growth. At the same time, funding for infrastructure projects has shown signs of slowing.Amid a lack of macro and fundamental catalysts, Brent is most likely to keep trading within a $66-67/bbl range today. Later in the week, it should make a push toward $70/bbl against the backdrop of what we expect to be upbeat US and eurozone macro LD GAINS AS TREASURY YIELDS HOLD STEADYGold rose to $1,880/oz on Friday as the 10y US Treasury yield consolidated near 1.62%. A slight retreat in the euro, to EUR/USD 1.218, also created headwinds for bullion. May PMI data was published for a range of DMs on Friday. The services PMI readings for Germany, France and the eurozone pointed to generally optimistic sentiment across Europe in May. For instance, the services gauge for the eurozone printed at 55.1, above the expected 52.5. This pushed the euro to a recent high and supported gold in the first half of Friday's trading. Meanwhile, the PMI data from the US was extremely upbeat. The US manufacturing PMI climbed to 61.5, while the services PMI rose to 70.1, the highest reading since data collection began in October 2009. The very positive US PMI data helped push gold to $1,870/oz in the second half of the session given the implications for Fed policy. However, bullion was able to recover to $1,880/oz by the end of the day, with support coming from a reported 2.7% decline in US existing home sales in April and Dallas Fed President Robert Kaplan's comment that we are likely to see another fairly weak US jobs report for the month of May.During the Asian session today, gold traded near $1,885/oz. It drew tailwinds from the reports that the White House had lowered the price tag on its infrastructure proposal from $2.25 trln to $1.7 trln. The highlights this week data-wise are the second set of US 1Q21 GDP data on Thursday and the April US personal income and spending report (with PCE price index readings) on Friday. Other releases due from the US include housing price indexes for March; new home sales, durable goods orders, pending home sales and wholesale inventories for April; and the University of Michigan consumer sentiment index and the Conference Board consumer confidence index for May. Sentiment indexes for the eurozone are also due on Friday. Today's fairly light macro calendar features the Chicago Fed National Activity Index for April. Overall, we think gold is likely to trade sideways in a range of $1,875-1,890/oz