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Data and debt ceiling to move prices next week

Commodity prices generally fell this week, as investors’ expectations for the Federal Reserve’s policy rate rose on concern about the persistence of high inflation. The dollar also strengthened. Declines in many equity indices also pointed to a risk-off mood among investors, which weighed on commodities too.

Next week, China’s May official (Wednesday) and Caixin (Thursday) PMI survey data will probably add to evidence that China’s economic rebound is losing steam. Industrial metals prices could drop back, but given the extent of this week’s falls, disappointment in China’s recovery may already be ‘priced in’.

Elsewhere, we expect US data releases, including the ISM manufacturing and employment data for May, to be consistent with a slowing economy, which could drag on interest rates expectations and give a boost to commodity prices. That said, if the US debt ceiling is finally raised, the gold price could fall further.

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