Powell & China wake commodities from their slumber

After a quiet start to the week, Friday’s announcement of additional Chinese tariffs on US imports and Jerome Powell’s speech at Jackson Hole stirred prices (and President Trump) into action. Most industrial commodities fell as the news on trade fed into the gloomy assessment of global growth which has gripped markets of late. In contrast, gold prices benefitted from Powell’s comments that downside risks have intensified which, coupled with today’s tariff announcement, suggests that more easing by the Fed is on the way. While we don’t see the US-China trade war abating any time soon, we continue to anticipate less Fed easing than the market currently expects which should keep the price of gold in check further ahead.