Commodities Daily - October 11, 2019

> Oil prices surge as OPEC pledges to avert oil price slump, reports of missile strike on Iranian tanker; partial US-China deal eyed. Yesterday, investors were buoyed by a dramatic shift in US-China trade talks. After a dismal start to this week - the low-level talks resulted in further escalation - the high-level talks got off to a good start yesterday. Today, investors will primarily be looking for any sign that the timing or scale of US tariffs may change (the US is currently set to hike tariffs next Tuesday). Trump is set to meet Liu He at the White House (after which an announcement on tariffs is possible) at 21:45 Moscow time today. An escalation in the Middle East amid growing chances of at least a partial US-China deal could support Brent to as high as $62/bbl today, although at this level it would encounter strong technical resistance. Investors are now digesting the monthly IEA report, which has just been released. > Gold slides on upbeat US inflation and labor market data amid US-China trade talk optimism. This morning, gold broke above the $1,500/oz mark following the start of trading in Europe amid a potential military escalation in the Middle East following news that an Iranian oil tanker has been hit by what was reported to be missiles that caused two separate explosions. However, we think this morning's gain will prove temporary given the rising chances of a partial US-China deal, which could push gold to down $1,490/oz later today.