Trade was the big theme this week once again, with China suggesting it could restrict exports of rare earth elements to the US, as well as a rise in US-Mexico trade tensions. Consequently, the prices of oil and other industrial commodities fell, while the price of gold was lifted by a jump in safe-haven demand. Looking ahead, we suspect that any further increase in trade tensions could continue to weigh on the prices of industrial commodities, but may provide a boost to gold and silver prices.
Turning to next week, it is busy on the data front. The most notable releases include the May Markit manufacturing PMIs for China and the US (both Monday), and the US employment report (Friday). Given that the already-released official Chinese PMI fell by more-than-expected in May, another poor reading from the unofficial PMI could lead to further falls in industrial metals prices. Meanwhile, the price of gold could receive a boost if the US employment report points to a faltering US economy.
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