Thursday, 23 March 2017
What’s next? – GOLD, OIL 23.03.17
Gold prices edged down in early morning trade on Thursday as market participants looked ahead of the House Republicans vote on Trump’s American Health Care Act.
On the Comex division of the New York Mercantile Exchange, gold for April delivery was down 0.17 percent to trade at $1247.60 a troy ounce as of 07:10 GMT.
Investors are worried that GOP members will decide not to support the bill, increasing concerns that the Trump administration won’t be able to deliver economic promises due to lack of coordination with its own party in Congress.
The AHCA is meant to replace the so-called Obamacare plan, which has been heavily criticized during the Trump campaign. The new bill needs a simple majority to be approved, with most the attention focused on the Republicans as Democrats are not expected to support it anyhow.
So far, the bill stands on a complicated balance. At least 28 Republicans are expected to vote no on Trump’s project, putting Washington on a difficult spot as they should lose more than 21 votes for a victory.
On Wednesday, political uncertainty favoured bullion as investors opted for a wait-and-see positioning until the vote and moved capital to safe-haven assets such as gold.
In economic news, US existing home sales pushed down the dollar, which benefited gold prices. According to the latest report from the National Association of Realtors, resales fell by 3.7 percent to a 5.48 million units last month.
Oil futures moved higher in Asian hours on Thursday as investors quickly recovered from US inventories data and prepared for the weekly oil rig count.
US West Texas Intermediate oil futures traded at $48.34 a barrel on the New York Mercantile Exchange, up 0.62 percent from its previous settlement. The international Brent crude oil futures rose 0.57 percent to trade at $50.93 a barrel as of 07:10 GMT.
On Wednesday, oil benchmarks came under pressure after the US Energy Information Administration said crude inventories increased by 5 million barrels in the week ended March 17 to a record high of 533.1 million barrels. Analysts had forecasted a 2.8 million barrel increase.
Gasoline stockpiles continued to decline, this time by 2.811 million barrels vs. a 2.008 million barrels reduction seen. Distillate products dropped by 1.910 million barrels, againsts expectations for a draw of 1.386 million barrels.
Today, Baker Hughes will release its latest oil rig count as of 18:00 GMT. Last week, the oilfield services provider reported a build of 14 units to a total of 631 platforms.
In the last few weeks, oil benchmarks were under pressure over concerns that OPEC-led efforts will be jeopardized by growing US shale production. The oil cartel and other independent producers such as Russia agreed to cut 1.8 million bpd in the first six months of this year.
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