Protectionist rhetoric weighs on prices

Trade tensions escalated this week, as the US and China engaged in tit-for-tat announcements on proposed tariffs. The prices of commodities which would be affected by the tariffs generally fell. However, both sides have pledged to negotiate and prices could bounce back if the worst fears of a trade war fade. Unsurprisingly, gold benefitted from heightened safe-haven demand and the price received a further boost from the lower-than-expected rise in US non-farm payrolls data on Friday. Turning to next week, any further developments in the US-China trade spat could continue to drive prices. The Fed is also scheduled to publish the minutes of its March policy meeting on Wednesday which may shed some light on why Fed officials raised their interest rate projections. Finally on Friday, China is set to publish its March trade data which will give us a clearer picture of commodity demand in the first quarter. We expect somewhat lower commodity imports in March.