Thursday, 9 March 2017
What’s next? – GOLD, OIL 10.03.17
Gold prices edged lower in Asian session on Friday as expectations for a rate hike from the Federal Reserve are close to 100 percent while investors await key employment data.
The yellow metal was also affected after South Korea’s Constitutional Court permanently removed President Park Geun-hye from office. The nation’s first woman leader was impeached and suspended from her position over accusations of corruption.
News came in at moments of high tension in Asia, as North Korea recently launched a series of ballistic missiles breaking Japan’s economic zone. As a result, Prime Minister Shinzo said his country won’t hesitate to respond to threats from Kim Jong Un’s regime.
On the Comex division of the New York Mercantile Exchange, gold for April delivery was down 0.46 percent to trade at $1197.20 a troy ounce as of 06:50 GMT.
In economic news, initial jobless claims came in at 243,000 against 235,000 estimated by analysts and 20,000 more than the previous week. Today, investors will be paying close attention to non farm payrolls and unemployment rate for February, both due at 13:30 GMT.
The Federal Open Market Committee will meet on March 14-15 to define whether is time to raise interest rates for the first time this year.
Recent hawkish rhetoric from Fed Chair Janet Yellen and other FOMC officials has fueled speculation that the regulator is ready to make a new move to normalize its monetary policy.
Gold prices are sensitive to US rate moves as they lift the opportunity cost of holding non-yielding assets while making the metal more expensive for foreign-currency holders. According to CME Group’s FedWatch tool, traders are pricing in a 90% chance of a rate hike.
Crude prices retained previous gains in Asian hours on Friday as Saudi Arabia said it’s not sure the so-called output cut program will be extended for another round after June 30 while investors await for the weekly oil rig count data.
US West Texas Intermediate oil futures traded at $49.68 a barrel on the New York Mercantile Exchange, up 0.81 percent from its prior close. The international Brent crude oil futures rose 0.71 percent to trade at $52.56 a barrel as of 07:00 GMT.
Baker Hughes will release its weekly report on oil rigs at 18:00 GMT. Last week, the oil service provider said platforms operating in the United States increased by 7 units, marking a seventh weekly consecutive build and sending the total count to 609.
Market participants are currently worried that rising US shale production could derail OPEC-led efforts to rebalance crude supply and add more pressure to oil benchmarks. While the investment climate does not look promising, oil prices were able to hold tight at the medium-term range. The $50 mark is still seen as a key support for Brent and WTI contracts.
Earlier this week, the US Energy Information Administration reported a build of 8.21 million barrels in crude reserves for the week ended March 3, leaving the total count at 528.4 mn barrels. However, stockpiles of gasoline and distillate products fell by 6.6 million barrels and 2.7 million barrels respectively. Cushing oil added 867,000 barrels.
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