Commodities Daily - May 28, 2020

> Gold prices advancing amid negative rhetoric from US officials and more protests in Hong Kong. Gold is trading at around $1,720/oz as we write. A number of data releases are due from the US today, including 1Q20 GDP, initial jobless claims for the week ending May 23, durable goods orders and pending home sales for April. If the political backdrop remains negative, we think gold could return to around the $1,725-1,730/oz level. > Base metals strengthening today despite political risks. Yesterday, base metals were weighed down by negative sentiment, with the exception of aluminum. However, optimism returned this morning, pushing 3m copper forwards up 1%, nickel up 0.5% and aluminum up 0.3%. The positive momentum was partly fuelled by the Bloomberg Chinese economic survey for May, which indicated that investors expect the Chinese economy to recover and GDP to expand 1.7% this year and 8% in 2021.GOLD PRICES ADVANCING AMID NEGATIVE RHETORIC FROM US OFFICIALS AND MORE PROTESTS IN HONG KONGGold prices were volatile throughout the day yesterday. Quotes were hovering at $1,715/oz in the morning before moving down to $1,700/oz and even approaching technical support at $1,693/oz. The move lower was largely attributable to positive investor sentiment owing to the easing of quarantine measures and also the announcement by the European Commission of a EUR750 bln stimulus package. However, sentiment took a turn for the worse after the US open. US Secretary of State Mike Pompeo declared Hong Kong to no longer be autonomous from China and that the US would continue to study the possibility of sanctions against Beijing. This comes as protests in Hong Kong continue. Meanwhile, Chinese lawmakers approved a proposal for sweeping new national security legislation in Hong Kong.Today, the negative backdrop is likely to continue, which we think could drive gold prices back up to around the $1,725-1,730/oz level. Furthermore, a number of data releases are due from the US today, including 1Q20 GDP, initial jobless claims for the week ending May 23, durable goods orders and pending home sales for April. SE METALS STRENGTHENING TODAY DESPITE POLITICAL RISKSBase metals have so far today brushed off a further increase in tension between the US and China. Copper was pushed down to $5,250/tonne yesterday but has climbed above $5,300/tonne today, while nickel is standing at around $12,200/tonne and aluminum is trading at $1,530/tonne.The positive momentum was partly fuelled by the Bloomberg Chinese economic survey for May, which indicated that investors expect the Chinese economy to recover and GDP to expand 1.7% this year and 8% in 2021. Today, the market focus will be on the final day of the regular session of China's National People's Congress and a speech by Chinese Premier Li