Friday, 17 March 2017
What’s next? – GOLD, OIL 17.03.17
Gold prices edged down in Asian trade on Friday as sentiment continues to be determined by political risk and interpretations of the latest Federal Reserve statement.
On the Comex division of the New York Mercantile Exchange, gold for April delivery was unchanged at $1227.10 a troy ounce as of 06:45 GMT.
Overnight, bullion extended gains while the dollar continued to drop over a typical “buy the rumor, sell on fact” strategy following the Federal Reserve interest rate decision.
On Wednesday, the Federal Open Market Committee rose its short-term benchmark rate by 25 basis points to a range of 0.75 percent to 1.00 percent. It is the second rate move in just three months and the regulator insisted on its plan to hike another two times later this year.
The US central bank will continue to adjust interest rates in a gradual way during 2017 and 2018. Until February, market players were pricing in only two hikes for this year, but a sudden change in Fed Chair Janet Yellen’s rhetoric increased speculation over a March rate hike.
Yellen’s press conference on Wednesday was more dovish than expected, although she said more hikes are on its way if the economy continues to perform at the current pace. The bank will keep an accommodative monetary policy in order to support developments in the US economy.
US equities have been rallying notably since November 2016 over speculation of higher fiscal spending, tax cuts and deregulation promises from the Trump administration.
Later in the day, trades will pay close attention to industrial production for February at 13:15 GMT, with a 0.2 percent build seen. Michigan consumer expectations and sentiment for March will be out at 14:00 GMT.
Oil futures were showing little progress in Asian hours on Friday as investors looked ahead of further probes on the effectiveness of OPEC’s output cuts to reduce global oversupply.
US West Texas Intermediate oil futures traded at $49.34 a barrel on the New York Mercantile Exchange, up 0.20 percent from its prior close. The international Brent crude oil futures rose 0.08 percent to trade at $51.78 a barrel as of 06:30 GMT.
Crude prices have recently dropped over concerns that OPEC-led efforts to rebalance the oil markets could be derailed by increasing US shale production.
Saudi Arabian Energy Minister Khalid Al-Falih said on Thursday that if oil inventories continue to be high by mid-year, the output cuts will possibly be extended for another term.
The deal, which involves both OPEC and non-OPEC countries such as Russia, targets a 1.8 million bpd cuts for the first semester of 2017.
Earlier this week, the US Energy Information Administration (EIA) reported a 237,000 crude oil barrels reduction in the week ended March 10. Analysts had expected a 3.7 million barrels build. Wednesday’s figures marked the first weekly drop in reserves after nine consecutive increases.
Baker Hughes will release its weekly oil rig count at 18:00 GMT. Last week, data exposed a build of 8 platforms, bringing the total count to 617.
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