Tuesday, 21 February 2017
What’s next? – GOLD, OIL 21.02.17
Gold prices moved lower in Asian hours on Tuesday, as the US markets are expected to reopen after a long weekend and investors to turn into high-yield assets.
The yellow metal settled on the downside last week following the continuous strengthening of greenback, despite growing uncertainty in the United States and Europe.
On the Comex division of the New York Mercantile Exchange, gold for April delivery dipped 0.38 percent to trade at $1234.40 an ounce as of 04:50 GMT.
Bullion oscillated between small gains and losses on Monday, as US equities remained closed and trading volumes was considerably below average.
In the week ahead, Washington’s agenda seems to be again back on the spotlight. Expectations are building up regarding President Donald Trump’s tax reform and other economic policies.
The 45th US President promised to unveil a “phenomenal” tax plan between this and next week, a reform that is supposedly targeted at both, individuals and corporations.
Today, gold traders will also pay close attention to speeches from Fed representatives. Minneapolis Fed President Neel Kashkari is due to speak at 13:50 GMT, followed by Philadelphia Fed President Patrick Harker at 17:00 GMT and San Francisco Federal Reserve President John Williams at 20:30 GMT.
On Monday, Cleveland Fed President Loretta Mester said it would be more “comfortable” to raise benchmark rates in the near term if the economy continues to perform well.
Gold prices are sensitive to changes in US rates. Bullion is denominated in US dollars and higher rates make the yellow metal more expensive for investors holding foreign currencies.
Crude oil prices extended gains in Asian trade on Tuesday as market participants prepared for the reopening of US markets and looked ahead of further inventories data later this week.
US West Texas Intermediate oil futures traded at $54.01 a barrel on the New York Mercantile Exchange, up 0.43 percent from its previous settlement. The London-based Brent crude oil futures fell 0.02 percent to trade at $56.17 a barrel as of 05:55 GMT.
Both oil benchmarks traded higher on Monday despite US equity markets remained closed for President’s Day holiday. Investors continued to speculate on higher oil prices as a result of the OPEC-led output cut agreement.
According to the Joint Organisations Data Initiative, Russia has officially overtaken Saudi Arabia as the world’s top crude producer in December. Both countries are currently reducing their production levels as agreed back in December in order to rebalance oil supply and demand.
The report shows that Russia pumped 10.49 million barrels per day (bpd) by the end of last year, while the Saudis extracted 10.46 million bpd from a previous 10.72 million bpd. Third on the list was the United States, with production levels standing at 8.8 million bpd.
The American Petroleum Institute will release its weekly crude stockpiles on Wednesday, a day later than the usual due to the long weekend. Official data from the US Energy Information Administration is scheduled on Thursday at 16:00 GMT. Market analysts are pointing at a 9.527 million barrels increase for the week ended February 17.
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