The earlier surge in oil and industrial metals prices came to an abrupt halt this week as oil stabilised and there were sharp falls in the prices of some metals. In particular, the US Treasury’s announcement of a four-month delay to the sanctions on Russia’s Rusal led to a slump in the price of aluminium.
Next week, the focus is likely to return to the health of the Chinese economy and the direction of US monetary policy. The official (Monday) and unofficial (Tuesday) manufacturing PMIs for China will give us an early indicator of activity in April. We expect both readings to be somewhat softer, which could weigh on industrial commodity prices. Meanwhile, the Fed is set to make a policy announcement on Wednesday but we are not expecting a rate cut. That said, another strong US employment report (April data to be released on Friday) would pave the way for a potential rate hike in June and may prompt a further fall in the price of gold.
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