Monday, 3 April 2017
What’s next? – GOLD, OIL 03.04.17
Gold prices traded under pressure in early Monday hours amid mixed economic reports from Asia and increasing political risks regarding the US-China relations.
On the Comex division of the New York Mercantile Exchange, gold for April delivery dropped 0.22 percent to trade at $1248.50 a troy ounce as of 07:00 GMT.
In Australia, AIG manufacturing index for March came in at 57.5 from a previous month 59.3. Building approvals for the first quarter 2017 rose by 8.3 percent, beating expectations for a delicate 0.5 percent estimated by economists. Retail sales slipped by 0.1 percent while analysts had forecasted a 0.3 percent increase.
On Friday, New York Fed President William Dudley said the Federal Reserve is not rushing to tighten its monetary policy, although there might be new hikes if labor conditions and inflation continue to perform at the current place.
Today, market participants will be paying attention to a series of speeches from FOMC officials, including again New York’s Dudley, Philadelphia Fed President Patrick Harker and Richmond Fed President Jeffrey. Investors are looking for hints on the timing of the next Fed rate hike.
The yellow metal is sensitive to US rate moves as it is a dollar-priced commodity. A stronger currency makes it more expensive for investors holding foreign currencies.
Traders are looking ahead of a US-China summit later this week to evaluate the course of international relations. President Donald Trump and his Chinese counterpart President Xi Jinping will be gathering at Mar-a-Lago Golf Resort in Florida to discuss jobs and trade.
Oil prices edged lower in Asian hours on Monday as concerns over the increasing US shale production after Baker Hughes reported an eleven-week consecutive oil rigs build.
The oilfield service provider said that the number of oil rigs operating in the United States rose by 10 last week, bringing the total count to 662 platforms, the highest level since Sept 2015.
US West Texas Intermediate oil futures traded at $50.54 a barrel on the New York Mercantile Exchange, down 0.12 percent from its previous settlement. The international Brent crude oil futures dropped by 0.21 percent to trade at $53.42 a barrel as of 07:00 GMT.
Investors are still looking for hints on OPEC’s possible extension of the output cut deal. Last week, a few officials said the pact is likely to be extended for another six months this year.
Last November, OPEC and non-OPEC members such as Russia agreed to reduce their crude production by 1.8 million barrels per day for the first six months of 2017 in order to rebalance global oil supply. Kuwait and Iraq have already expressed their support for an extension.
During the weekend, Russia presented its latest oil output figures. According to the document, the crude giant produced 11.05 million barrels per day in March, ripping 200,000 bpd from October’s mark, used a guide to measure cuts.
Speculation over a possible extension of output cuts have provided extra support to oil benchmarks in recent days. Representatives from OPEC and non-OPEC countries will be gathering in April to evaluate whether it’s advisable to prolong cuts or not. A final decision on the matter will be taking on May 25.
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