OIL: Brazil on Trump's Latest Round of Tariffs

The latest pullback in Gold appears corrective in nature, with medium-term trend signals remaining bullish. However, the outcome of today’s US-China trade talks will be key for near-term sentiment. Initial support to monitor in the event of a positive tariff outcome is the 50-day EMA at $3,242.4, which shields key support at $3,121.0 (May 15 low). Should these support levels hold, or if talks do not bring a de-escalatory outcome, it may provide a platform to build back towards the June 5 high at $3,403.5 and the May 7 high of $3,435.6.

• In recent weeks, we have highlighted that the positioning backdrop in gold futures was attractive for those looking to re-engage longs. Indeed, CFTC data in the week to June 3 indicated a 13.7k build up of non-commercial net longs, the third consecutive weekly increase and the largest since the week to March 18.
• Reviewing the latest trends in structural sources of gold demand using data from the World Gold Council:
  • ETF flows were negative 19.1 tonnes in May, the first negative month since November 2024. Outflows were concentrated between May 9 – May 16 (i.e. encompassing the May 12 US/China trade agreement announcement). Weekly flows since May 16 have all be positive.
  • Central Bank’s bought 14.8 tonnes of gold in April. This included 12 tonnes from Poland and 2.2 tonnes from China. However, it’s worth noting speculation in recent weeks that some central banks (e.g. the PBOC) may be underreporting their gold holdings.
• Although Gold’s impressive rally has stalled somewhat over the last month, we have started to see increased upside participation from other precious metals such as silver and platinum in June. These rallies appear to have been driven by lower prevailing levels of vol and a retrenchment of tariff risk. A positive tariff-talk outcome between the US and China could see these trends extend, likely at Gold’s expense.  

FX ROLL PACE:

• EUR: 29% vs 20% earlier.
• GBP: 29% vs 24%.
• JPY: 46% vs 44%.
• CHF: 31% vs 30%.
• CAD: 24% vs 22%.
• AUD: 30% vs 22%.
• NZD: 31% vs 30%.
• SEK; 31% vs 10%.
• NOK: 33% vs 5%.

Note that the Scandies trade for very little on the CME, so doesn't take much to shift the percentage, can sometime be just a few lots.

Some of the benchmark long end UK yields are near/threatening clean breaks of key technical support levels.

• 10-Year gilt yields have pulled back towards the uptrend drawn off the Dec ’21 lows, printing as low as 4.531%. Uptrend support intersects at 4.517% today.
• 30-Year gilt yields have breached their equivalent trendline (5.259%), trading as low as 5.245%. Gilt bulls will look to force a close below that level. Next yield support comes in at the April 30 low (5.181%), followed by the April 7 low (5.044%).
• Moving average setups in both benchmarks are not biased towards lower yield levels at this stage, with the simple 50-DMA above both the 100- & 200-DMA in both instances.