Friday, 23 June 2017
What’s next? – GOLD, OIL 23.06.17
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what’s next
GOLD
Gold prices extended gains in Asian hours on Friday as demand for safe-havens increased following reports indicating that the Chinese regulator is analyzing borrowing of major private sector companies that intend to buy assets overseas.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were trading up by 0.26 percent at $1,252.70 a troy ounce as of 04:45 GMT.
On Thursday, the yellow metal was higher as the US dollar extended losses during American hours. Gold prices rebounded from their weakest level in five weeks, adding 0.70 percent to trade at $1,253.99 a troy ounce as of 12:55 GMT.
A day earlier, the precious metal touched its lowest level since May 17 at $1,247.70 following upbeat economic data that increased expectations for a new rate hike later this year.
According to the CME Group’s FedWatch tool, traders are pricing in a 16.4 percent chance of rate move in September and a 40.9 percent for December.
Investors were paying attention to different speeches from FOMC speakers this week. So far there hasn’t been a consensus on whether the regulator should move forward with the monetary normalization process or wait until better economic data supports the case.
Last week, the US central bank said a third rate increase was still on the agenda for this year, while explaining that a few downbeat economic reports won’t derail the strategy.
Gold is sensitive to interest rate moves in the United States, which rise the opportunity cost of holding non-yielding assets such as the precious metal, while promoting demand for the dollar.
OIL
Oil benchmarks were higher in early trading on Friday as quotes showed a moderate correction ahead of the weekly US rig count from Baker Hughes.
The US benchmark West Texas Intermediate oil futures traded at $42.89 a barrel, up 0.35 percent from its prior close. Meanwhile, the London-based Brent crude oil futures rose 0.35 percent to trade at $45.38 a barrel as of 04:45 GMT.
Last week, the number of oil platforms rose for the 22th consecutive week, rising speculation that OPEC-led efforts wouldn’t be able to counteract an ongoing output overhang.
On Thursday, tropical storm Cindy partially affected operations in the Gulf of Mexico, which accounts for 17 percent of US crude output and 5 percent of natural gas.
Crude prices settled in green territory yesterday, but remained inside the downward channel as sentiment continues under heavy pressure amid lack of news support.
Earlier this week, the US Energy Information Administration said that crude inventories dropped by 2.45 million barrels in the week ended June 16 against an initially forecasted 2.1 million barrels decline.
Despite the recent extension of OPEC + non-OPEC output cut agreement, oil benchmarks have fallen more than 20 percent since this year’s peak.
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