Friday, 26 May 2017
What’s next? – GOLD, OIL 26.05.17
Labels:
what’s next
GOLD
Gold futures edged up in Asian hours on Friday, but gains were limited due to the recovery of the US dollar in the light of freshly published Federal Reserve May minutes.
On the Comex division of the New York Mercantile Exchange, gold for June delivery was up 0.44 percent to trade at $1261.90 a troy ounce as of 07:30 GMT.
The yellow metal is currently finding support around the $1,247.60 mark, its May 24 low and resistance around $1,263.80, the peak reached on May 23.
The US dollar index, which tracks the greenback against a basket of six major rivals, was up 0.09 percent at 97.24 earlier this morning. The dollar is currently recovering from strong loses, especially as economic data is suggesting stronger labor market conditions.
As bullion is a dollar-denominated commodity, a stronger currency makes it less appealing for investors holding foreign currencies, while dampening demand for safe-haven assets.
The Federal Reserve minutes showed that officials are considering a reduction of its massive balance sheet later this year. For that purpose, FOMC representatives believe using monthly caps to limit bond sales monthly is the right way to do it. Also, unwinding Fed’s balance sheet suggests higher borrowing costs are still to come, rising expectations for a rate hike in June.
According to CME Group’s FedWatch tool, markets are pricing in an 87.7 percent chance of a rate move at the June monetary policy meeting by 25 basis points to 1.00 - 1.25 percent.
OIL
Oil prices fell in Asian trade on Friday, extending into red territory as market players took profits following a widely anticipated extension of OPEC output cuts for an additional nine months.
The US West Texas Intermediate oil futures traded at $49.12 a barrel on the New York Mercantile Exchange, up 0.49 percent from its prior close. The international Brent crude oil futures rose 0.72 percent to trade at $51.83 a barrel as of 07:20 GMT.
Market analysts said recovery is on the way, while signaling that there has been a clear overreaction to the deal extension. Benchmarks dropped below the $50 mark overnight, losing more than 5 percent by the end of the day in what can be described as a massive sale off.
The Organization of Petroleum Exporting Countries (OPEC) and aligned external producers, such as Russia, agreed to extend the deal until March 2018. The oil cartel said cut levels will remain the same as in the first six-month period, 1.8 million barrels per day.
Crude prices have been moving upwards lately on speculation that OPEC and its allies would take a more aggressive approach in the deal, promoting even deeper cuts for members. As pact conditions remained steady, market players felt disappointed.
Moving into details, Nigeria and Libya will be exempted from cutting their production levels, while Iran has been allowed to keep its current output without any reductions. Iran has reentered the oil market last year after strong sanctions imposed in the light of its nuclear program. The nation has repeatedly said that it cannot afford to sacrifice market share.
Saudi Arabia Energy Minister Khalid Al-Falih explained that current cut dimensions were enough to rebalance supply levels by the end of 2017. He also pointed out that larger US shale production is still to come, but that hopefully that factor won’t derail OPEC-led efforts.
Oil prices fell in Asian trade on Friday, extending into red territory as market players took profits following a widely anticipated extension of OPEC output cuts for an additional nine months.
The US West Texas Intermediate oil futures traded at $49.12 a barrel on the New York Mercantile Exchange, up 0.49 percent from its prior close. The international Brent crude oil futures rose 0.72 percent to trade at $51.83 a barrel as of 07:20 GMT.
Market analysts said recovery is on the way, while signaling that there has been a clear overreaction to the deal extension. Benchmarks dropped below the $50 mark overnight, losing more than 5 percent by the end of the day in what can be described as a massive sale off.
The Organization of Petroleum Exporting Countries (OPEC) and aligned external producers, such as Russia, agreed to extend the deal until March 2018. The oil cartel said cut levels will remain the same as in the first six-month period, 1.8 million barrels per day.
Crude prices have been moving upwards lately on speculation that OPEC and its allies would take a more aggressive approach in the deal, promoting even deeper cuts for members. As pact conditions remained steady, market players felt disappointed.
Moving into details, Nigeria and Libya will be exempted from cutting their production levels, while Iran has been allowed to keep its current output without any reductions. Iran has reentered the oil market last year after strong sanctions imposed in the light of its nuclear program. The nation has repeatedly said that it cannot afford to sacrifice market share.
Saudi Arabia Energy Minister Khalid Al-Falih explained that current cut dimensions were enough to rebalance supply levels by the end of 2017. He also pointed out that larger US shale production is still to come, but that hopefully that factor won’t derail OPEC-led efforts.
Subscribe to:
Post Comments
(
Atom
)
Very and very interesting. Recently I ordered an essay at https://www.essay-company.com/book-report on a similar topic and that`s was an amazing work that earned me A+.
ReplyDeleteAfter that, I've got a big interest in new trends of gold and oil.
We have on board domain experts who are PhD holders from renowned universities across the globe, and we exclusively offer top notch Law Assignment Help Our experts have tremendous experience in furnishing excellent quality Business Law Assignment Help within the shortest of deadlines. Our Tort Law Assignment Help
ReplyDeletegood day friends! I come to you with a great find! this service https://urbansignandprint.com/products/custom-vinyl-banners/ best among print companies and outdoor advertising! checked on my own experience and ordered banners for my business! I recommend
ReplyDelete