Monday, 10 April 2017
What’s next? – GOLD, OIL 10.04.17
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what’s next
GOLD
Gold futures posted small gains in Asian trade on Monday as traders’ focus shifted to increasing tensions with North Korea after Donald Trump sent an aircraft carrier close to the shore to take actions against Kim Jong-Un’s missile threat.
The yellow metal settled in green territory on Friday as market participants digested mixed employment data, while geopolitical risks promoted demand for safe haven assets.
By the end of last week, US military launched dozens of missiles to hit a Syrian airbase as a response to a recent chemical attack that devastated the Idlib province.
On the Comex division of the New York Mercantile Exchange, gold for June delivery was trading at $1255.70 a troy ounce as of 06:30 GMT.
According to the Bureau of Labor Statistics, nonfarm payrolls increased by 98,000 in March, falling very short from an estimated 180,000 build. However, the unemployment rate unexpectedly dropped to a 10-year low of 4.5 percent.
Investors paid close attention to employment data as they looked ahead of further Federal Reserve rate increases later this year. Market players are currently weighing in around a 58 percent chance of a June rate hike, as displayed by CME Group’s FedWatch tool.
So far, short-term benchmark rates are holding between 0.75 percent and 1.00 percent after the US regulator raised them by 25 basis points at its March monetary policy meeting.
Higher interest rates support the US dollar and are usually seen as a bullish factor for safe haven assets such as gold, which is a greenback-denominated commodity.
OIL
Crude prices were higher in early trading hours on Monday as market players awaited for further inventory data later this week while keeping an eye on global geopolitical tensions.
Oil prices closed higher last Friday as US military fired dozens of missiles to destroy a Syrian airbase in response to Bashar al-Assad’s chemical attack on the Idlib region.
However, gains were limited by Baker Hughes weekly US oil rig count, which reported a 10 units increase that pushed the total count to 672 platforms.
US West Texas Intermediate oil futures traded at $52.48 a barrel on the New York Mercantile Exchange, up 0.46 percent from its previous settlement. The international Brent crude oil futures soared by 0.38 percent to trade at $55.45 a barrel as of 06:30 GMT.
While Syria is not a big crude producer, it’s still part of the Middle East, which is indeed a powerful producer of crude oil worldwide. So, a disruption of Syria’s production is seen as a positive factor as inventories are expected to go down.
Meanwhile, the US Energy Information Administration reported an unexpected build in crude inventories for the week ended March 31, although analysts had betted on a drawdown.
Investors are currently focusing on a possible extension of OPEC’s output cuts in June. The oil cartel agreed to shred 1.8 million barrels per day from global production in the first six month of 2017 in order to push down prices by rebalancing supply levels.
Nevertheless, increasing US shale production is threatening to derail OPEC-led efforts, considerably limiting gains and weighing on market sentiment.
Fort Financial Services
Crude prices were higher in early trading hours on Monday as market players awaited for further inventory data later this week while keeping an eye on global geopolitical tensions.
Oil prices closed higher last Friday as US military fired dozens of missiles to destroy a Syrian airbase in response to Bashar al-Assad’s chemical attack on the Idlib region.
However, gains were limited by Baker Hughes weekly US oil rig count, which reported a 10 units increase that pushed the total count to 672 platforms.
US West Texas Intermediate oil futures traded at $52.48 a barrel on the New York Mercantile Exchange, up 0.46 percent from its previous settlement. The international Brent crude oil futures soared by 0.38 percent to trade at $55.45 a barrel as of 06:30 GMT.
While Syria is not a big crude producer, it’s still part of the Middle East, which is indeed a powerful producer of crude oil worldwide. So, a disruption of Syria’s production is seen as a positive factor as inventories are expected to go down.
Meanwhile, the US Energy Information Administration reported an unexpected build in crude inventories for the week ended March 31, although analysts had betted on a drawdown.
Investors are currently focusing on a possible extension of OPEC’s output cuts in June. The oil cartel agreed to shred 1.8 million barrels per day from global production in the first six month of 2017 in order to push down prices by rebalancing supply levels.
Nevertheless, increasing US shale production is threatening to derail OPEC-led efforts, considerably limiting gains and weighing on market sentiment.
Fort Financial Services
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