STIR: RBA Dated OIS Remains Firmer After Surprise RBA Decision

Gold prices fell on Friday after the better-than-expected US payroll data, which showed the labour market holding up in the face of elevated trade uncertainty and reducing the chance of a near-term Fed rate cut. They rose to a high of $3375.65/oz and then fell to a low of $3307.18 after the US release. It finished down 1.3% to $3310.42 as the stronger US dollar added pressure (USD BBDXY +0.3%) but was still up 0.6% on the week. Bullion is currently lower again at around $3310.7. 

• The moderate increase in gold over last week is consistent with the bullish theme remaining intact. Moving average studies remain in a bull-mode position. Initial resistance is at $3403.5, 5 June high, while initial support is at $3313.2, 20-day EMA.
• China increased its gold reserves again in May, the seventh consecutive monthly build, according to Bloomberg. The PBoC added 60k troy ounces.
• US-China trade talks are scheduled to take place in London on Monday and progress on an agreement is likely to be negative for gold as it would reduce uncertainty and the negative risks to global growth.
• Silver rose 0.9% to $35.98 on Friday to be up 9.1% last week and is currently around $36.02. These gains reinforce the impulsive bull wave. It continues to trade above the key bull trigger at $34.903.
• Equities rallied with the S&P up 1.0% and Euro stoxx +0.4%. The S&P e-mini is little changed so far in Monday’s APAC session. Oil prices rose sharply on Friday with Brent +2.0% to $66.65/bbl. Copper fell 2% and iron ore is lower at around $95/t. 

US Tsy futures have started Monday's session tracking sideways. We were last at 109.31, +02, for the September 10yr future. Cash Tsy yields have opened up a little mixed, with back end slightly firmer in yield terms. The 10yr yield was last near 4.51%. We have seen some softness in the front end, the 2yr last around 4.02%, off close to 2bps versus end Friday levels. 

• The US 2/10s Tsy curve was last around +49bps, slightly stepper versus end Friday levels, but still well within recent ranges.
• Weekend news flow was focused on US protests in major cities, along with planned US-China trade talks, which resume in London today. US equity futures were around flat in latest dealings.
• The main data focus will be on Wednesday's CPI print. 

Oil prices jumped on Friday boosted by news that US-China trade talks would take place in London on Monday and data showing no deterioration in the US labour market in May following the reciprocal tariff announcement at the start of April. The market had been worried that increased protectionism and uncertainty would weigh on energy demand. The USD index rose 0.3%.

• WTI rose to a high of $64.80/bbl following the better-than-expected US payroll data. It finished up 2.2% to $64.77 to be up 6.6% on the week. It has started today lower at $64.60, but remains above initial resistance at $64.19 opening up $65.82, a key level. The bear trigger is at $54.33. Bloomberg reports that volatility is close to its lowest since early April as benchmarks range trade.
• Brent reached $66.67/bbl and finished up 2% at $66.65 to be 6.2% higher on the week. It is currently around $66.56. The benchmark traded above both the 50-day EMA at $65.28 and 13 May high at $66.30 opening up $67.73. The bull trigger is at $73.88, 2 April high. The bear trigger is at $57.78.
• Supply developments remain in focus following OPEC’s decision to increase output 411kbd from July and Saudi comments that it is considering further rises over the northern hemisphere summer. At the same time, Iran-US talks are ongoing and if there is an agreement may ease sanctions on oil exports, but Ukraine-Russia ceasefire negotiations appear to have failed with the possibility restrictions on Russia will be expanded.