I. Precious Metals
Gold

Gold slipped more than 1 percent to its lowest in 6-1/2 months on Monday as the greenback strengthened and an ongoing U.S.-European Union trade spat pressured precious metals. Spot gold ended at $1,242 per ounce.

Bullion embarked on a downward trend since July due to a firmer dollar and escalating trade friction, as traders interpreted. But we believe this round of decline was triggered by deflationary market environment worldwide - a bad news for inflation-hedging gold, as monetary tightening picked up after Donald Trump’s inauguration as U.S. President, while non-U.S. economys' tightening came short of market consensus.

Higher rates tend to strengthen the dollar and boost bond yields, better safe haven amid rising global trade tensions. Easing geopolitical tensions, in euro zone and Korea Peninsula in particular, also reduced the appeal of non-yielding bullion.

On chart, gold has breached below the key support of $1,248, and will test the next support at $1,236. A reversion can be hardly expected despite that gold is already in oversold range as shown by the RSI Index. Bargain-hunting is not recommended in the near term. Investors shall continue to short at highs amid current environment. In terms of volatility, investors are recommended to stay on the sidelines due to relatively subdued volatility and limited room for profits.

On Wednesday, July 4, trade will halt early for the U.S. Independence Day holiday. Investors awaited minutes of a June Federal Reserve meeting on Thursday and U.S. employment data on Friday.

Silver

Silver was down 1.4 percent at $15.8295 an ounce after hitting $15.73, the lowest in 6-1/2 months. Like gold, investors shall watch the support at $15.8, and look at the next support at $15.6 if the level is crossed below. Any further loss can be limited at current multi-year lows, which cannot be perceived as a good entry point.

II. Commodities
Crude Oil

Oil futures fell Monday as supplies from Saudi Arabia and Russia rose while economic growth stumbled in Asia amid escalating trade disputes with the United States.

U.S. President Donald Trump tweeted on Saturday that Saudi Arabia's King Salman bin Abdulaziz Al Saud had agreed to pump more oil, "maybe up to 2,000,000 barrels." while Iran strongly opposed the increase.

Brent crude fell $1.93 to settle at $77.30. U.S. light crude fell to settle down 21 cents at $73.94. The premium for U.S. crude for the front month compared with the second month widened to as much as $2.38 a barrel, the most since Aug. 20, 2014. The move indicates the market expects supply shortages to be more severe in the short term.  Despite of possible increase in OPEC’s oil production and lower demand from Asia, global crude inventories remained tight, a support to oil prices.

Copper

LME copper prices hit the lowest since end-March on Monday as the market priced in weaker demand in top consumer China, which is embroiled in the trade spat with the United States even as its manufacturing sector slows.

Benchmark copper ended down at $6,523 a tonne, hitting the lowest since March 26. Prices of the metal used widely in power and construction are expected to remain subdued as Growth in China's manufacturing sector cooled slightly in June amid an escalating trade dispute with the United States.

Soybean

U.S. soybean futures closed at their lowest level in more than two years Monday on worries about trade fights with China and other main export partners. CBOT August soybeans were down 10 cents at $8.53-1/2 a bushel.

Heavily-traded November fell 10-1/2 cents to $8.69-1/2. Investors shall closely watch the progress in trade disputes between the world’s two largest economies.

Dealing Room, ICBC Beijing Branch
                        Qin Gang