Thursday, 6 April 2017
What’s next? – GOLD, OIL 06.04.17
Gold futures moved higher in Asian hours on Thursday as market participants digested the latest FOMC minutes while receiving support from a weaker greenback.
Analysts said the Fed March minutes were a bit less hawkish than predicted, such as it happened with the FOMC statement and speech from Chairwoman Janet Yellen last month. The regulator seems to be taking a moderate approach until further economic data is available.
The US central bank is carefully looking into labor market conditions and inflation, two key indicators that help FOMC officials determine the right course for monetary policy. In March, the Fed rose by 25 basis points its short-term rates to a range between 0.50-0.75 percent.
On the Comex division of the New York Mercantile Exchange, gold for April delivery added 0.54 percent to trade at $1255.20 a troy ounce as of 06:50 GMT.
Investors will closely monitor a two-day meeting between US President Donald Trump and China’s President Xi Jinping that kicks-off this afternoon. The encounter will be very relevant to understand the future of international relations and trade.
The yellow metal settled lower on Wednesday following ADP’s nonfarm employment change report for March. According to data, the US private sector added 263,000 jobs last month, beating expectations for a 187,000 jobs build. Official figures will be released on Friday.
Strong labor data increases chances of a Fed rate hike, which is seen as a negative factor for bullion prices as they are denominated in US dollars.
Crude oil prices headed south in Asian hours on Thursday following an unexpected build in US crude inventories and as players looked ahead of Trump-Xi’s meeting later in the day.
US West Texas Intermediate oil futures traded at $51.04 a barrel on the New York Mercantile Exchange, down 0.22 percent from its previous settlement. The international Brent crude oil futures dropped by 0.20 percent to trade at $54.25 a barrel as of 06:50 GMT.
On Wednesday, the US Energy Information Administration released its weekly stockpiles report on crude and refined products for the week ended March 31. Data showed a 1.566 million barrels increase in crude inventories, breaking estimations for a 435,000 barrels decline.
Distillates came down by 536,000 barrels, while gasoline dropped in 1.422 million barrels. Officials figures were not aligned with API’s previous report, which said crude stockpiles had actually decreased last week.
This outcome has increased pressure on both oil benchmarks over concerns that OPEC-led efforts to rebalance oil supply levels will be derailed by growing US shale oil production.
Today, focus will remain on the Trump-Xi meeting in search for hints over the future of bilateral relations. Tomorrow, investors await Baker Hughes weekly oil rig count as of 17:00 GMT.
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