Commodities Daily - September 4, 2020

> Gold eases further amid drop in US tech stocks. The US stock market selloff accelerated yesterday, with the NASDAQ plunging by around 5%, and investors were even trying to sell defensive assets. As a result, gold retreated 0.6% to close at $1,931/oz amid neutral macro data from the US. Today, we expect the US nonfarm payroll data for August (15:30 Moscow time) to be key for gold. Asian equities are down as we write, as are US and European futures. Should these trends continue, we think gold could approach technical support at $1,913/oz today.> Base metals under pressure yesterday despite strong Chinese PMI data. Prices fell on three-month forward contracts for nickel (by 3.9%), copper (2.0%) and zinc (0.8%) yesterday. Lead (+0.3%) and aluminum (-0.3%) proved more resilient to the selloff. Sentiment toward base metals has brightened this morning and yesterday's losses pared, thanks to an upbeat weekly inventory update from the Shanghai Futures Exchange. The focus in the base metals market today will be a speech from Chinese President Xi Jinping on international trade.GOLD EASES FURTHER AMID DROP IN US TECH STOCKSKey markets retreated yesterday, with the NASDAQ Composite shedding 5% to 11,458 points. This negative sentiment was reflected in the gold price, which was trading at $1,940-1,950/oz early in the day but came under pressure with the opening in New York and eventually closed 0.6% lower.Yesterday's data releases were neutral for the market. The US services PMI for August came in at 56.9, down from 58.1 in July and in line with the consensus forecast of 57. US weekly jobless claims data (881k versus the 950k consensus) indicated a labor market slowly returning to normal. Our FX strategists expect today's US labor market report for August to surpass consensus expectations and fuel demand for risk assets. The report is due at 15:30 Moscow time, and the consensus is calling for a 1.35 mln rise in nonfarm payrolls.Asian equities are down as we write, as are US and European futures. Should these trends continue, we think gold could approach technical support at $1,913/oz today. Conversely, an about-turn in equities would likely see gold gaining support and returning to the $1,940-1,950/oz SE METALS UNDER PRESSURE YESTERDAY DESPITE STRONG CHINESE PMI DATASome fairly strong data out of China yesterday morning failed to lift base metal prices. The Caixin Chinese composite PMI showed a solid 55.1 reading for August (up from 54.5 in July), while the services gauge printed at 54.0 (versus 53.9 expected). However, market volatility during the US trading session resulted in dollar strengthening, which weighed on commodity prices. As a result, all base metals except for lead posted price declines yesterday. This morning, the mood has been more upbeat. Three-month forward contracts for copper have bounced back 1.5% to trade close to $6,650/tonne, nickel has recovered around 1% to return to the $15,250/tonne mark and lead has added 0.85% to reach $1,960/tonne. The weekly inventory update from the Shanghai Futures Exchange this morning showed declines in stockpiles of nickel (1.0%), zinc (0.9%) and lead (5.3%), though copper stocks were up around 4% w-o-w. The focus in the base metals market today will be a speech from Chinese President Xi Jinping on international trade. As a reminder, US and Chinese trade representatives held a phone call on August 24, after which it was reported that progress had been made on the phase one trade agreement and that the two sides would continue to work together on implementing the