Thursday, 6 July 2017

What’s next? – GOLD, OIL 06.07.17

Posted by Anonymous at 09:45 Labels:

GOLD

Gold prices were moving upwards in early trading hours on Thursday, with Fed minutes and geopolitical tensions favouring demand for safe-haven assets.

On the Comex division of the New York Mercantile Exchange, gold futures were up by 0.34 percent to trade at $1,225.80 a troy ounce as of 05:10 GMT.

On Wednesday, the yellow metal settled in green territory as geopolitical tensions in the Korean peninsula increased following a statement from UN Ambassador Nikki Haley saying the United States would use military forces if necessary to counteract North Korean threats.

“One of our capabilities lies with our considerable military forces. We will use them if must, but we prefer not to have to go in that direction,” Haley explained in the UN Security Council.

The precious metal was also supported by falling expectations for a Federal Reserve interest rate hike later this year due to continuing downbeat data in the United States.

Factory orders fell 0.8 percent in May, more than the 0.5 percent decline initially estimated by analysts. Data increased concerns about future monetary policy plans.

The dollar and 10-year Treasuries retreated on the back of weaker-than-expected economic data. As gold is a dollar-denominated commodity, a weaker greenback makes it more appealing for investors holding foreign currencies.

Also, the Federal Reserve released minutes from its June monetary policy meeting, exposing concerns about the outlook for inflation and its effects on the pace of rate normalization.

As for the plan to reduce Fed’s massive balance sheet, views differed between FOMC members. While some believe August is the right time to kick-off, others said December looks like a more reasonable date to start cutting the bond-heavy portfolio.

OIL

Oil prices were higher in Asian hours on Thursday as market players digested upbeat industry stockpiles data and prepared for official inventories later in the session.

The US West Texas Intermediate oil futures traded at $45.47 a barrel, up 0.75 percent from its prior close. Meanwhile, the London-based Brent crude oil futures rose 0.69 percent to trade at $48.12 a barrel as of 05:10 GMT.

Crude benchmarks settled in red territory on Wednesday, with market participants showing serious concerns over OPEC-led efforts to reduce the ongoing supply overhang.

WTI futures dropped 4.1 percent to end the session at $45.13 per barrel, while the Brent contracts plunged by 3.57 percent to $47.84 a barrel in late hours.

News agency Bloomberg reported that Russia would not support a proposal to increase production cuts as it could send the wrong message to the market.

Back in May, the Organization of Petroleum Exporting Countries and a group of independent produces led by Russia agreed to extend output cuts for a nine-month period until March 2018.

However, both decided to leave reduction volumes at 1.8 million barrels per day, which came in as a big disappointment for market players, provoking a fall in prices.

Contributing to losses, Reuters said OPEC crude exports rose to 25.92 million barrels per day in June, up 450,000 bpd from the previous month and 1.9 million bpd more year-over-year.

Meanwhile, the American Petroleum Institute said crude inventories fell by a surprising 5.7 million barrels last week, while analysts expected a 1.6 million reduction.

Ahead in the session, investors will be paying close attention to the release of crude and refined product stockpiles from the US Energy Information Administration as of 14:30 GMT. Market analysts estimate a 2.2 million barrels reduction for the week ended June 30.

Ahead in the session, traders will be focusing on the latest employment report from ADP, initial jobless claims, services PMI and ISM non-manufacturing PMI.

No comments :

Post a Comment

Subscribe to: Post Comments ( Atom )