Commodities Daily - September 7, 2020

> Gold prices stable at around $1,930/oz. The US jobs report exerted temporary pressure on gold prices on Friday, although bullion was later able to retrace the move lower and close the day with a gain of 0.2% going into what is a long weekend in the US. Key data releases today include German industrial production and Chinese gold and currency reserves, while any headlines emerging from post-Brexit deal talks could be important. Investment demand for gold remains high, as attested to by the most recent data on ETF holdings and hedge fund positioning. > Base metal prices continue to climb higher despite mixed import data from China. This morning, three-month forwards on copper have climbed to $6,750/tonne, while nickel has held near $15,200/tonne, zinc is trading at $2,500/tonne and aluminum at $1,800/tonne. This week, the base metal market will be focused on the public hearing of the US-China Economic and Security Review Commission on Wednesday. Meanwhile, the latest CFTC data shows that hedge funds have continued to build up their long positions in copper, which grew by 6.5% in the week to September 1.GOLD PRICES STABLE AT AROUND $1,930/OZOn Friday, the key catalyst for the gold price was the US jobs report. Nonfarm payroll additions came in at 1.37 mln, just a touch above the 1.35 mln consensus, while the unemployment rate dropped to 8.4%, from 10.2% in July. The jobs data pushed US Treasury yields higher, which led to a bout of pressure on gold prices, which dropped from $1,940/oz to $1,917/oz. However, this move was later largely retraced and bullion closed at $1,934/oz, a gain of 0.2% on the day. Investors may have resumed purchases of gold ahead of the long weekend in the US and as Brexit negotiations are set to get underway. Today, UK and EU negotiators will seek to make progress on a post-Brexit deal. Meanwhile, according to Bloomberg data, ETF purchases of gold remain high. As of Friday, aggregate gold holdings totaled 109.4 mln oz, a new all-time high. Hedge funds increased long positions in gold by 11.2k contracts over the week ending September 1, while short contracts were cut by 1.5k. This means the net long position of hedge funds currently exceeds 151k contracts. Key data releases today include German industrial production and Chinese gold and currency reserves. The PBoC data on changes in its gold holdings could be important for gold prices today, especially following the announcement by the Philippines' central bank that it may sell some of its gold reserves. We expect low volatility today and think that gold will probably hold within a $1,920-1,940/oz range. SE METAL PRICES CONTINUE TO CLIMB HIGHER DESPITE MIXED IMPORT DATA FROM CHINABase metals continue to trade in positive territory in the wake of optimistic rhetoric from China. On Friday, President Xi Jinping spoke at an international trade fair, where he announced that China intended to cooperate with other countries to enhance its intellectual property protections and also to facilitate the development of the digital and sharing economies. His speech seemed to indicate that China aimed to liberalize trade, which bodes well for its phase one trade agreement with the US. Investors were encouraged by President Xi's remarks, and the positive sentiment allowed almost all base metals (with the exception of zinc) to close higher in price on Friday. Also supportive for sentiment has been trade data published in China this morning showing a 9.5% y-o-y increase in exports in August following the 7.2% rise in July, which points to a gradual recovery in China's export markets as quarantine measures are eased. The import data was mixed overall and across the base metal spectrum in particular. While copper import volumes were up 38% y-o-y in 8m20 and amounted to 668 kt in August, imports of copper concentrate were under pressure, falling back to the June level of 1.59 mln tonnes, down from 1.8 mln tonnes in July. Investors continued to add to their long positions in base metals, including copper. According to CFTC data for the week ended September 1, long positions in copper amounted to 89.8k contracts and short positions 20.3k contracts. The net long position remained high at 69.5k