Commodities join in “relief” rally

The prices of most commodities rose this week as part of a more general rebound in financial markets. Although both the US and China announced another round of tariffs, there was some relief that the tariffs will be levied at 10% rather than 25% and the dollar weakened. Unsurprisingly, the commodities that benefitted most were those that have been hardest hit by fears that tariffs will lead to lower demand. These include the industrial and platinum group metals. Looking ahead, the “relief” rally may prove short-lived as the global trade war looks set to rumble on and there remain concerns about the health of China’s economy. Indeed, markets will be watching closely the China September PMI readings due to be released on Friday (official) and Monday 1st (Caixin). Elsewhere, a rate hike by the Fed at the FOMC meeting concluding on Wednesday appears inevitable and is unlikely to prompt a big reaction in commodity markets, including gold.