Monday, 20 March 2017
What’s next? – GOLD, OIL 20.03.17
Gold prices moved higher in Asian hours on Monday, with market players turning their focus into fresh speeches from FOMC officials scheduled this week.
On the Comex division of the New York Mercantile Exchange, gold for April delivery was 0.31 percent higher at $1234.00 a troy ounce as of 07:00 GMT.
A large number of Fed officials will be speaking during the week, including Chairwoman Janet Yellen. With a less-hawkish-than-expected March meeting on our back, investors will be paying close attention to remarks of policymakers in search for hints on timing of the next rate hike.
Last week, the Federal Open Market Committee announced a new rate hike of its short-term rate by 25 basis points to a range of 0.75 - 1.00 percent.
The FOMC statement and Janet Yellen’s conference showed a moderate rhetoric, although the key message was that the US economy is doing well and if it continues to perform at the current pace, another two benchmark rate hikes will come later this year.
Against the odds, gold prices reacted upwards to the FOMC rate hike last week. Market analysts described it as an inverse “buy the rumour, sell on fact”. Gold traders had been selling ahead of the March meeting and once the hike was confirmed, the opened long positions again.
As usual, Monday’s economic agenda is looking a bit empty. Traders will be expecting US President Donald Trump speech at 23:30 GMT.
Oil prices edged lower on Monday amid increasing US shale production and worries that OPEC-led efforts won’t be enough to fight global oversupply.
US West Texas Intermediate oil futures traded at $48.90 a barrel on the New York Mercantile Exchange, down 0.83 percent from its previous settlement. The international Brent crude oil futures slipped 0.64 percent to trade at $51.43 a barrel as of 07:00 GMT.
Market participants are fearing that production cuts promised by the Organization of the Petroleum Exporting Countries and other producers such as Russia will not be able to counteract a rising US drilling. OPEC and non-OPEC countries have agreed to shred nearly 1.8 million barrels per day from global production in the first six month of 2017.
On Friday, oil service provider Baker Hughes reported a new build in the US oil rig count. According to data, US drillers added 14 rigs in the week ended March 17, moving the total count to 631 platforms, the highest level since September 2015.
The US Energy Information Administration (EIA) reported a drop of 237,000 barrels reduction in crude inventories for the week ended March 10, while analysts had forecast a 3.7 million barrels build. These unexpected outcome broke a winning streak of nine consecutive weeks.
According to the US Commodity Futures Trading Commission (CFTC), oil traders have cut their long positions on crude futures and options last week, putting their bets on lower crude prices.
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