Monday, 3 July 2017

What’s next? – GOLD, OIL 03.07.17

Posted by Anonymous at 10:26 Labels:

GOLD

Gold futures notched down in Asian hours on Monday as upbeat economic data from China increased demand for risky assets, while traders looked ahead of a week full of key reports in Europe and the United States, including a new reading of nonfarm payrolls.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were down by 0.40 percent to trade at $1,237.30 a troy ounce as of 06:05 GMT.

China’s Caixin manufacturing PMI came in at 50.4 for June, beating an initially expected 49.5 and a previous result of 49.6. Again, the world’s second biggest economy outperformed expectations for a slowdown, contributing to a better market sentiment.

The yellow metal settled in red territory on Friday, marking the first weekly decline since March as the increase of international bond yields weighed on demand for non-yielding gold.

Last week, bullion prices came under pressure as several central bank leaders hinted on possible reduction of their current monetary stimulus programs.

Among those, interventions from the European Central Bank President Mario Draghi and Bank of England Mark Carney had the biggest hawkish impact on sentiment.

Federal Reserve Chair Janet Yellen also spoke last week but provided no relevant comments on monetary policy plans. Instead, she reinforced the idea that the regulator will continue with the normalization process as long as economic data supported the case.

According to Fed funds tracked by CME Group’s FedWatch tool, market players are currently pricing in a 50.9 percent probability of a rate move in December.

In the days ahead, market participants will pay close attention for Federal Reserve’s latest meeting minutes on Wednesday and a new job report on Friday.
OIL

Oil prices were higher in early trading on Monday, with the diplomatic crisis in Qatar reaching a peak over a deadline on 13 demands issued by Gulf countries to halt alleged financial support to terrorist and extremist organizations, promoting instability in the Middle east region.

So far, Qatar has shown no intention to comply with those demands. Foreign Minister Sheikh Mohammed bin Abdulrahman Al-Thani said “the list of demands is made to be rejected, [...] We are willing to engage in providing the proper conditions for further dialogue.”

The US West Texas Intermediate oil futures traded at $46.23 a barrel, up 0.41 percent from its prior close. Meanwhile, the London-based Brent crude oil futures soared 0.31 percent to trade at $48.92 a barrel as of 06:45 GMT.

Crude futures settled in green territory last week, gaining for a 7th consecutive session on Friday as the weekly oil rig count in the United States finally stopped growing.

According to oilfield services provider Baker Hughes, US drillers reduced by two the number of rigs operating on American soil, leaving the total count at 756 units.

Earlier in the week, the US Energy Information Administration reported a drop in crude production levels by 100,000 barrels per day to 9.25 million barrels for the week ended June 23.

Despite these upbeat factors healing investors sentiment, doubts that OPEC-led efforts would be able to counteract the ongoing supply overhang continued to weigh on both benchmarks.

In coming days, focus will again be directed to stockpiles weekly stats from API and EIA, as well as a new Baker Hughes oil rig count.

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