Thursday, 2 March 2017
What’s next? – GOLD, OIL 03.03.17
Gold prices were higher in early Friday trading as commodity traders looked ahead of speeches from Fed’s Yellen and other FOMC officials later in the day.
Overnight, the yellow metal settled in red territory as expectations concerning a March rate move rose notably following pro-hike remarks from usually dovish FOMC officials. Also, the US dollar extended gains and pushed safe-havens downwards.
On the Comex division of the New York Mercantile Exchange, gold for April delivery was up 0.07 percent to trade at $1233.80 a troy ounce as of 05:25 GMT.
On Wednesday, Fed Governor Lael Brainard - well-known for her dovish stand - said a rate hike this month could be a real thing as the economy continues to perform positively.
As an extra prove, initial jobless claims came in well below expectations at 223,000 from a previous 244,000. Analysts had forecasted a 6,000-application increase last week.
Today, gold investors will put their eyes on Fed Chairwoman Janet Yellen speech at 18:00 GMT in search for hints on the timing of the next rate move. The FOMC officials are due to kick off their two-day monetary policy meeting on March 13.
According to CME Group’s Fed Watch Program, market participants are currently pricing in around 80 percent chances of a March rate hike.
But Yellen is not the only FOMC official on the list today. Fed Bank of Richmond President Jeffrey Lacker is due at 15:15 GMT while Fed Governor Jerome Powell comes at 17:15 GMT.
Oil benchmarks traded higher in Asian hours on Friday as market players awaited the weekly oil rig count report later in the day.
On Thursday, crude prices dropped by more than 2 percent following reports that Russia’s compliance on OPEC’s output cuts was below agreed levels.
According to Russia’s Energy Ministry, crude oil production in January remained unchanged from a month early at 11.1 million barrels per day.
Russia and other independent producers joined last November an initiative of the Organization of Petroleum Exporting Countries to reduce global supply by 1.8 million barrels per day in the first six months of 2017, with a possible extension of conditions if needed. The idea behind this agreement is to prompt up prices by rebalancing supply and demand levels in oil markets.
US West Texas Intermediate oil futures traded at $52.67 a barrel on the New York Mercantile Exchange, up 0.11 percent from its previous settlement. The London-based Brent crude oil futures moved up 0.13 percent to trade at $55.15 a barrel as of 05:25 GMT.
However, US shale producers have reacted quickly to the OPEC-led deal by increasing their output significantly. Just two days ago, the Energy Information Administration reported a eight consecutive build in US inventories to a record 520.2 million barrels as for February 24.
Ahead in the day, oil service provider Baker Hughes will release its weekly oil rig count in the United States as of 18:00 GMT. Last week, the report showed a rise of 5 rigs, leaving the total count at 602 platforms, the highest level since mid-2015.
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