China stimulus likely to drive prices

Next week, commodity markets will be closely watching the annual meeting of China’s parliament, the National People’s Congress, hoping for additional fiscal stimulus. The government’s Work Report and Budget will be presented on the first day. Meanwhile, on Friday, China is set to publish its February trade data. Commodity imports held up well in January, but they may have been boosted by some stockbuilding ahead of the Lunar New Year holiday. As such, the February data could be weaker. Elsewhere, the US is set to publish its February employment report on Friday. Although we expect a further drop in the unemployment rate to 3.9%, we now think that the Fed’s tightening cycle has come to an end. There are clear signs that the US manufacturing sector is starting to struggle, perhaps in part owing to the weaker global backdrop. These factors have prompted us to revise up our end-2019 forecast for the price of gold to $1,400 per ounce ($1,350 previously).