I. Precious Metals
Gold
Gold prices climbed above $1,340 an ounce on Tuesday. Much of gold's recent strength can be attributed to the flight to assets perceived as being at less risk from geopolitical uncertainty that has been stoked up by events in the Korean peninsula. Analysts and South Korean policymakers believe North Korea may test another weapon on or around Sept. 9, its founding day. South Korea said on Monday it was preparing fresh military drills with its ally the United States and ramping up its ballistic missile defenses in response to North Korea’s sixth and most powerful nuclear test a day earlier. The escalated geopolitical tensions and eased U.S. dollar will continue to provide a floor to bullion. In the near term, gold is expected to remain robust.
On technical front, we maintain our view that gold will meet resistance at $1,350. In the near term, gold is expected to test last year’s high at $1,370. Gold bulls are recommended to hold their positions.

Silver
Silver underperformed gold, closing with a cross pattern on chart, due to mounting safe-haven sentiment. But we believe this would not last. As long as risk appetite eased, silver’s gains would lead gold.
On technical front, headline index basically remains intact without divergence in the MACD index. The white silver is expected to test the key mark of $18 in the near term.

II. Commodities
Crude Oil
U.S. crude futures surged almost 3 percent over $48.50 per barrel as the impact of Hurricane Harvey gradually faded. But another hurricane - Irma - strengthened on Tuesday into a Category 5 hurricane, the most powerful storm on the Saffir-Simpson scale with sustained winds of over 157 miles (251 km)per hour. The U.S. National Hurricane Center's forecast path for the storm has Irma passing south of Florida on Sunday on its way into the Gulf of Mexico. Signals that the Organization of the Petroleum Exporting Countries could extend its output limits beyond the first quarter of 2018 also boosted prices.
A sharp gain in crude prices will drive U.S. shale oil producers to raise rig counts and oil supply. We maintain our view that the gains will be limited, and oil prices will pull back once the hurricane passes and supply resumes.

Copper
Copper touched a three-year high on Tuesday but closed lower after weak U.S. factory orders prompted a pullback across industrial metals. Higher prices are supported by expectations of strong demand in top consumer China. Chinese manufacturing accelerated in August and growth is set to remain strong until the end of the year. A weaker dollar and supply concerns would keep providing upward momentum to the metal. We believe that copper will keep rising in the medium and longer term after a technical pullback in the near term.

Soybean
U.S. soybean futures rose around 2 percent to hit a 3-1/2-week high on Tuesday on technical buying. November soybeans contract formed a gap on its chart by opening above Friday's high, a bullish technical signal. Additional support stemmed from stepped-up export demand from top global soy buyer China. Uncertainty about the path of Hurricane Irma added support. The storm could potentially bring heavy rain to the Mississippi (River) Valley and Southeast next week, providing a floor to soybean in the near term.

Dealing Room, ICBC Beijing Branch
Cheng Yu