Daily Brief Macro: Global Commodities: All systems go for precious metals and more

• Gold prices have been supported by rising interest rates and central bank demand, but investor flow is now becoming the key driver for further sustained rally.
• Physical demand in China has decreased, but investor demand, particularly in ETFs, has been increasing over the past four months.
• The upcoming direction of gold prices will depend on the pace of Fed cuts and the shift in investor ownership from money market funds to gold ETFs.

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• Happy Sunday from Copenhagen.
• We made a major U-turn over the summer to align ourselves with the weakening of the labor market in the US.
• Thankfully, our nowcasting techniques give us a time-edge over the markets in assessing these peaks and troughs in the economic cycle ahead of major trend turns.

• Happy Friday from Copenhagen!We haven’t had the best week, but we are thankfully still doing well in trades trending in a cutting cycle, such as the steepener (Z4 vs.H7).
• The market is still grappling with a lack of true conviction in a slowdown of the US economy, and we share that sentiment.
• Interestingly, it is normal to see weak hiring ahead of the election in an election year, and if history is any guide, Oct-Dec will prove to be much stronger hiring-wise than the past 1-2 quarters.

• US oil and gas rig count fell by two to 588 for the week ending 20/Sep, the fifth decline in six weeks, after rising by eight last week.
• The US oil rig count stayed flat at 488 after rising by five last week. Gas rigs fell by one to 96, marking its fourth decrease in five weeks.
• For the week ending 20/Sep, US energy producers added two rigs in Texas. Conversely, they cut one rig each in Colorado, Louisiana, New Mexico, and Utah.   

• Adverse weather impacts Chinese prices   
• Arbitrage buying spurs prices up  
• TSR inventory drops in September 

• SGX Iron Ore futures closed the week $1.38 lower, with wide trading range of $5.85/ton in a week filled with economic releases including FOMC and PBoC rate decisions.
• Momentum indicators are neutral; RSI at 37.70 signals potential upside, while the price remains below key moving averages, including the 9, 21, 50, 100, and 200-day SMAs.
• Prices broke below key volume profile support at $91.27 and may see a short-term rebound to $90/ton due to limited trading volume below this level.

• This week we look at Shopee’s tie-up with YouTube on e-commerce in Indonesia, MR DIY’s next plan to list in Indonesia, and GoTo helping to drive free school meals programme.
• We also look at the potential pitfalls of AI in the banking industry specifically for micro-lending, where the data may not be reliable, leading to a higher incidence of NPLs. 
• CrossASEAN Ground Zero is a thematic weekly product that focuses on key Southeast Asian themes and technology trends with a core focus on Indonesia.

• PMIs crashed in the Euro area and slowed in the UK yet broadly sustained a rapid pace in the US, which remains in rude relative health near its highs.
• Price balances also increased as forceful monetary easing into resilient demand risks reflating inflationary pressures from a hoped-for soft landing into no landing.
• US unemployment’s slight trend rise does not demand much easing to resolve. Dovish market pricing increasingly risks policy needing to reverse, like Brazil already has.

• According to the latest BofA fund manager survey, investors continue to sell commodities.
• Allocation-wise we’re now back at levels we were at the beginning of the pandemic back in 2020.
• Long commodities is now a contrarian trade again.

• The past week saw insights on GoTo Gojek Tokopedia (GOTO IJ), Adaro Energy (ADRO IJ), Bangkok Dusit Medical Services (BDMS TB), Lippo Karawaci (LPKR IJ), and Gajah Tunggal (GJTL IJ).
• There were also macro insights on the Singapore Economy, Malaysian Politics, and the Indonesian economy, as well as Helitap on natural rubber. 
• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated substantive, and actionable insights, macro and equity bottom, from across Southeast Asia.