BULLION – Bullion counter may trade with upside bias as gold prices rose on Tuesday, holding near a more than three-month high hit in the previous session, as worries over a global recession due to trade conflicts drove investors to find refuge in safe-haven assets. U.S. Secretary of State Mike Pompeo said on Monday that the United States is seeking to “level the playing field” with China after decades of unfair trade practices, but his Dutch counterpart said tariffs would hurt international trade. Meanwhile, U.S. President Donald Trump said the tariffs that his administration has imposed on Chinese imports were not pushing up U.S. inflation and were prompting manufacturers in the Asian powerhouse to move elsewhere. Mexican officials said that Mexico can reach an agreement with the United States to resolve a dispute over migration that prompted U.S. President Donald Trump to threaten punitive tariffs, as high-level talks were set to begin in Washington. U.S. Treasury yields slip to their lowest levels since September 2017 following remarks from St. Louis Federal Reserve President James Bullard who said a U.S. rate cut may be “warranted soon” because of global trade tensions and weak U.S. inflation.
ENERGY- Crude oil may remain in red as oil prices fell on Tuesday amid a global economic slowdown that is starting to hit oil demand, triggering calls in producer club OPEC for supply cuts to be extended. Crude oil futures are now around 20% below their 2018 peaks reached in late April. South Korea economy shrank by 0.4% in the first quarter while core inflation slowed to a near 20-year low in May, data showed on Tuesday, pointing to a further economic slowdown in Asia. Oil prices were under downward pressure as the tight supply focus (is) switching to increased risk of lower growth and demand. The Middle East dominated producer club of the Organization of the Petroleum Exporting Countries (OPEC), together with some allies including Russia, has been withholding supply since the start of the year to prop up the market. U.S. natural gas futures fell to a three-year low on Monday as the amount of gas flowing to liquefied natural gas (LNG) export plants declined and amid expectations that near record production will allow utilities to refill inventories to near normal levels by the end of the summer.
BASE METAL – Base metals may trade with sideways to weak bias. Industrial metals on Tuesday traded in tight range amid a lack of progress in the prolonged U.S.-China trade war and weak manufacturing data that sparked concerns of slowing global growth and demand for metals. Growth in U.S. manufacturing activity slowed in May to its weakest pace in over two years as factory managers raised concerns about a trade war between the United States and China, a national survey showed on Monday. Manufacturing activity in the euro zone contracted for a fourth month in May and at a faster pace, as the U.S.-China trade war, slumping automotive demand, Brexit and wider geopolitical uncertainty took their toll, a survey showed. Top aluminum producers have offered Japanese buyers premiums of $115-$120 a tone for July-September primary metal shipments, up 10%- 14% from the current quarter, amid tighter supply.
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