Tuesday, 11 April 2017
What’s next? – GOLD, OIL 11.04.17
Gold prices moved higher in early Asian trading on Tuesday as geopolitical tensions continued to promote demand for safe haven assets such as bullion.
On the Comex division of the New York Mercantile Exchange, gold for June delivery was up by 0.33 at $1258.00 a troy ounce as of 03:10 GMT.
Fed Chair Janet Yellen participated in a Q&A session at the University of Michigan on Monday. Yellen said the US regulator remains on track in its plan to increase rates gradually this year. She also said the country is finally enjoying a “healthy economy”.
"Whereas before we had our foot pressed down on the gas pedal trying to give the economy all the oomph we possibly could, now allowing the economy to kind of coast and remain on an even keel -- to give it some gas but not so much that we are pressing down hard on the accelerator -- that’s a better stance of monetary policy," said Yellen.
Investors are currently weighing in more than 63 percent chance of a rate hike in June, according to CME Group’s FedWatch tool.
Increasing expectations for a Fed rate hike pressured the yellow metal despite a recent rise in geopolitical risks in the Middle East and North Korea.
Gold is a dollar-denominated asset, which usually benefits from uncertainty and market fears as traders look for non-yielding assets to move their capital.
Today, investors will be paying attention to February’s JOLTs JOb Openings as of 14:00 GMT for further guidance on labor market conditions and a speech from FOMC Kashkari at 17:45 GMT.
Oil futures edged higher in Asian hours on Tuesday as market players looked ahead of US stockpiles figures from the American Petroleum Institute (API) later in the day.
US West Texas Intermediate oil futures traded at $53.10 a barrel on the New York Mercantile Exchange, up 0.04 percent from its prior settlement. The international Brent crude oil futures rose by 0.11 percent to trade at $56.04 a barrel as of 03:10 GMT.
The API report on crude and refined products inventories will be available in late afternoon, while the US Energy Information Administration is due to release official data on Wednesday.
Economists forecasted an increase of 316,000 barrels for the week ended April 7. Gasoline and distillate stockpiles are expected to fall in 1.761 million barrels and 896,000 barrels respectively.
Crude benchmarks settled higher on Monday as Libya’s Sharara oilfield remained blocked by an armed group, according to sources related to the matter.
Geopolitical tensions in the Middle East were underpinned after US President Donald Trump ordered the US military to fire 59 missiles to a Syrian airbase in response to Bashar al-Assad chemical attack in the Idlib province last week.
Investors are currently trying to understand whether OPEC-led output cuts would be extended for another six months. While OPEC members expressed their full support to the deal, independent producers such as Russia said results so far haven’t been as good as estimated.
OPEC and non-OPEC countries agreed to cut 1.8 million barrels from global crude supply in the first six months of 2017 in order to prompt up prices by rebalancing supply levels.
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