Oil and copper lead the way

This week, the prices of most commodities benefited from a further weakening of the US dollar and data showing that China’s growth accelerated in Q2. But individual fundamentals also played a role. In particular, a sharp fall in US crude and gasoline stocks boosted oil prices and provided further evidence that the market is rebalancing. At the same time, copper rallied on fears that a potential ban on copper scrap imports to China at the end of next year will reduce supply markedly. Looking ahead, the releases of the official (on Monday) and unofficial (on Tuesday) China July manufacturing PMIs will be closely watched. We expect the Caixin index to have edged slightly higher in July, which should support industrial metals prices. On Friday, the focus will return to the US, with the release of July’s employment report. We anticipate that this will show another healthy gain in non-farm payrolls of around 200,000, and the unemployment rate falling back to 4.3%, which is likely to weigh on the price of gold.