Tuesday, 14 February 2017
What’s next? – GOLD, OIL 15.02.17
Gold prices edged higher on Wednesday as investors digested Janet Yellen’s remarks on monetary policy and economic future before the Senate Banking Committee.
On the Comex division of the New York Mercantile Exchange, gold for April delivery rose 0.14 percent to trade at $1,227.10 an ounce as of 04:55 GMT.
The yellow metal came under pressure after Federal Reserve Chairwoman said that waiting too long to raise rates would be “unwise” in a context of economic expansion and higher inflation.
Yellen also expressed confidence that benchmark rates will eventually be normalized, although gradual rate hikes should be backed by strong economic and labor figures.
During its December monetary meeting, the regulator said interest rates could be raised as much as three times this year. However, market participants believe two hikes are the most suitable alternative.
According to Fed funds tracked by CME Group’s, traders are pricing around 23 percent chances for a rate adjustment next month, while odds for June stand at nearly 70 percent.
Movement of US interest rates are a key factor for gold prices, as they increase the opportunity cost for holding safe-haven assets such as gold.
On Monday, the precious metal dropped to $1,220.30 under pressure that President Donald Trump economic and tax reforms will promote further growth.
Oil prices moved lower in Asian trade on Wednesday as the American Petroleum Institute anticipated a larger-than-expected build in US crude inventories.
The API said crude stockpiles grew by 9.94 million barrels in the week ended February 10, while analysts had forecasted 3.5 million barrels. Gasoline inventories also increased by 720,000 barrels and distillate products by 1.5 million barrels.
US West Texas Intermediate oil futures traded at $52.85 a barrel on the New York Mercantile Exchange, down 0.66 percent from its previous settlement. The London-based Brent crude oil futures plunged 0.57 percent to trade at $55.65 a barrel as of 04:55 GMT.
The US Energy Information Administration is due to release its official report on crude and refined products inventories at 15:00 GMT. Analysts are pointing at a 3.175 million barrels build, and 1.15 million barrels for distillates and gasoline.
Investors’ mood continues to be determined by concerns over increasing US shale production that could derail OPEC’s efforts to rebalance markets.
Earlier this week, EIA’s monthly report confirmed that US drillers are rapidly rising their output levels. Now, oil production stands at 8.98 million barrels per day, its highest point since April ‘15.
Market participants will keep an eye on Baker Hughes oil rig count on Friday for further evidence on whether US drillers are stepping up production levels to counteract OPEC-led plan.
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