What’s next? – GOLD, OIL 03.05.17

GOLD
Gold futures moved higher in Asian hours on Wednesday, as market participants prepared for a new rate announcement and press conference from the Federal Reserve.
Investors are searching for clues on the timing of the next interest rate hike. As the economy expanded less-than-expected in the first quarter, traders also want to understand the impact of such performance on the regulator’s monetary plan.
On the Comex division of the New York Mercantile Exchange, gold for June delivery traded at $1255.60 a troy ounce as of 07:00 GMT.
The yellow metal was able to compensate previous losses overnight, as investors increased demand for safe-haven assets ahead of the US central bank meeting and the dollar eased.
Manufacturing and construction data have also recently displayed weaker-than-expected results, which builds speculation over possible changes on the policy program. At the time, the regulator expects at least two new hikes later in the year, although economic reports should create a suitable environment for moving forward with those.
Wall Street have rallied since the November election on expectations that a Trump administration will promote higher fiscal spending, reduce taxes for individuals and corporations, and deregulate key industries.
Today, the Federal Open Market Committee is expected to leave interest rates unchanged. According to CME Group’s FedWatch tool, traders are pricing in less than a 5 percent chance of a rate move, while around 63.2 percent bet on a June hike.
Meanwhile, investors keep an eye on the upcoming French elections, which will take place on Sunday May 7. So far, polls show centristic pro-EU Emmanuel Macron as the winner.

OIL
Oil prices headed north in Asian session on Wednesday, rebounding after a 2-percent drop caused by an industry report showing a higher-than-expected reduction of US crude inventories.
According to the latest report of the American Petroleum Institute (API), crude stockpiles fell 4.16 million barrels in the week ended April 28. Economists expected crude stocks to fall in no more than 2.3 million barrels last week. Gasoline inventories notched down in 1.93 million barrels and distillate products drop in 440,000 barrels.
US West Texas Intermediate oil futures traded at $48.02 a barrel on the New York Mercantile Exchange, up 0.76 percent from its prior close. The international Brent crude oil futures soared 0.85 percent to trade at $50.89 a barrel as of 07:00 GMT.
The API figures came in hours before the US Energy Information Administration releases its official weekly report on crude and refined products inventories. The report will be available at 14:30 GMT and analysts looking at a reduction of 2.333 million barrels.
Crude futures settled in red territory on Tuesday, as players weighed in the impact of an extension of OPEC-led output cuts on global oil supply. The black gold extended losses after falling in one percent on Monday, despite expectation for an inventory reduction.
Investors are currently focusing on May 25, when OPEC leaders will gather to define whether to extend or not the production cut agreement beyond June. So far, key members such as Saudi Arabia and Kuwait have expressed their support to it, but independent producer Russia hasn’t given signals on the matter.

Fort Financial Services