Commodities Daily - October 3, 2019

> Oil slides on downbeat US ADP, EIA data amid stock market headwinds. The risk of an abrupt, December 2018-style global market selloff is certainly growing as the US has opened another front in its trade wars (this time with the EU) and the US economy appears to be deteriorating (following other major economies). How the October 10-11 US-China trade talks turn out and the Fed's willingness to cut rates this month for a third time this year are now key for the markets. A raft of data is due today but is unlikely to support risk assets, with technicals suggesting that Brent could slide to $55-56/bbl (where it fell in early August when Trump escalated the trade war with China) if the risk-off rally continues.> Gold prices recover to the $1,500/oz level. The ISM New York business conditions index and ADP employment reports were both disappointing, which supported gold prices. Yesterday it emerged that on October 15 the US is planning on introducing tariffs on $7.5 bln worth of imports from the EU. Against this rather negative backdrop, gold is trading at around the $1,500/oz mark. Today, a number of PMIs for September are due from Europe, while the US will see initial jobless claims, the nonmanufacturing PMI and new factory orders. If these releases generally come in downbeat, we would expect gold to move toward the $1,515/oz mark.