Risk aversion may prove temporary

The prices of most industrial commodities fell on Friday as investors turned more risk averse in the wake of the US missile attack on a Syrian air base. The main exceptions were the prices of oil and gold. While heightened political risk in the Middle East boosted oil, gold benefitted from safe-haven demand. We think the prices of both could fall back in the near term if, as seems likely, the US intervention proves to be a “one-off”. Looking ahead, on Monday markets will be digesting any fall-out from the meeting between Presidents Xi Jinping and Trump, which concludes on Saturday. Otherwise, it will be a relatively quiet week for data releases, apart from China’s March trade data on Thursday. We expect the trade balance to return to surplus as the seasonal distortions fade. OPEC will also publish its production data for March.