A sharp rise in China’s July manufacturing PMI boosted the prices of most commodities last week, but we don’t think that the upturn in China’s economic activity will be sustained, given the increasing headwinds from policy tightening. Elsewhere, a strong US employment report points to further rate hikes by the Fed in the coming months, which are likely to weigh on the price of gold.
Looking ahead, next week will be relatively quiet in terms of data releases. On Tuesday, China’s trade data will give us some indication of the strength of commodities demand at the start of the third quarter. On Friday, the US Department of Agriculture will release its August World Agricultural Supply and Demand Estimates (WASDE) report, which will provide some direction for grains prices.
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