Metals on a roll

The prices of most commodities – notably industrial metals – rose this week. While fundamentals have been supportive, we think that the most recent rallies in prices have been exaggerated by speculative activity. Oil prices bucked the otherwise-positive trend in commodities markets, despite the risk of supply disruptions in the US owing to Hurricane Harvey. Turning to next week, the release of China’s official (Thursday) and unofficial (Friday) August manufacturing PMIs will be closely watched. Weak readings may take some of the heat out of industrial metals prices. On Friday, the focus will return to the US, with the release of August’s employment report. We anticipate that this will show another healthy gain in non-farm payrolls of around 200,000 and a drop in the unemployment rate, which could weigh on the price of gold.