Commodities Daily - May 29, 2020

> Gold prices holding above $1,720/oz; Jerome Powell to speak at 18:00 Moscow time. Moderately positive US macro data were unable to push gold prices lower yesterday, while the ongoing US-China tension is providing support. Gold finished yesterday 0.5% higher. In addition to Powell's speech today, a number of US macro releases are due, including wholesale inventories, personal income and outlays, the MNI Chicago PMI and University of Michigan consumer sentiment. > Base metals mixed so far today. The markets are engrossed by the political tensions between the US and China. US President Donald Trump will hold a press conference to discuss the situation in Hong Kong later today. The ILZSG has also reported that global zinc and lead balances ran a surplus in 1Q20. This morning, the Shanghai Futures Exchange reported an 18% drop in copper inventories over the past week and an 8% decline in aluminum stocks. As we write, 3m copper forwards are sitting around the $5,345/tonne mark (+0.2% so far today), aluminum is at $1,536/tonne (-0.1%), zinc at $1,960/tonne (+1.4%) and nickel at $12,220/tonne (-0.2%).GOLD PRICES HOLDING ABOVE $1,720/OZ; JEROME POWELL TO SPEAK AT 18:00 MOSCOW TIMEYesterday, gold prices posted solid gains early in the day and had even reached $1,726/oz ahead of the US open. The catalyst for this was China's National People's Congress having passed the Hong Kong security law. Investors viewed this as a likely harbinger of further confrontation with the US. However, the data that was released yesterday did little to support demand for defensive assets. US initial jobless claims for the week ending May 23 came in at 2.12 mln, the lowest in 10 weeks, while durable goods orders were down 17% (versus the consensus of a 19% drop). The weakest figure was the second estimate for 1Q20 US GDP: the annualized figure showed a 5% Q-o-Q drop (down from the initial reading of a 4.8% decline). The decline in personal consumption, however, was revised to 6.8%, an improvement over the 7.5% drop in the first reading. This morning, gold is consolidating around the $1,720/oz mark. The spotlight today will be on Fed Chairman Jerome Powell, who may comment on yield curve control measures in a moderated virtual discussion, and US President Donald Trump, who will hold a press conference on China. The big macro releases due from the US today include wholesale inventories, personal income and outlays, the MNI Chicago PMI and the University of Michigan consumer sentiment index. We do not see any triggers for a drop in gold prices today and note that the next technical resistance level is near $1,732/oz. SE METALS MIXED SO FAR TODAYUS President Donald Trump's press conference later today is likely to have a considerable bearing on financial markets. Trump will discuss the Chinese national security law for Hong Kong and could even announce specific actions in response, such as sanctions against officials and companies.Against this highly uncertain backdrop, base metals are having a mixed session so far. As we write, 3m copper forwards are sitting around the $5,345/tonne mark (+0.2% so far today), aluminum is at $1,536/tonne (-0.1%), zinc at $1,960/tonne (+1.4%) and nickel at $12,220/tonne (-0.2%). Copper is finding support from fairly positive inventory data, as the Shanghai Futures Exchange has reported an 18% drop over the past week to 145 kt, while aluminum stocks have slipped 8% to 296k and zinc inventories have eased another 3.5% to 107 kt.The ILZSG has also reported that global zinc and lead markets ran a surplus in 1Q20. The zinc market surplus reached a rather high 239 kt. Demand for the metal in 1Q20 fell 4% y-o-y as consumption slid in Europe, India, Japan and South Korea. Meanwhile, zinc output remained fairly stable, easing only 0.5% Q-o-Q, though it was still up 3%