Friday, 7 July 2017

What’s next? – GOLD, OIL 07.07.17

Posted by Anonymous at 09:41 Labels:

GOLD

Gold prices were lower in Asian trade on Friday, with players looking ahead of key economic reports later in the day.

On the Comex division of the New York Mercantile Exchange, gold futures were down by 0.29 percent to trade at $1,219.80 a troy ounce as of 05:45 GMT.

On Thursday, the yellow metal bounced from previous session lows, as disappointing jobless claims and ADP employment increased uncertainty over future monetary policy adjustments.

According to the ADP National Employment Report, the US private sector added 158,000 jobs in June, below an initially estimated 185,000 gain and a previous addition of 230,000 positions.

Initial jobless claims rose by 4,000 to a seasonally-adjusted 248,000 for the week ended June 30, marking a third consecutive weekly increase.

The Institute for Supply Management said its non-manufacturing moved to 57.4, above of an expected 56.5 reading and a prior 56.9 in May.

The US dollar index, which gauges the greenback against a basket of six major currencies, was 0.51 percent lower at 95.57 by the time of this writing.

Gold, a dollar-denominated commodity, benefits from a weaker greenback as it becomes less expensive for investors holding other currencies.

Ahead in the session, traders would be paying attention to the release of nonfarm payrolls, average earnings and the unemployment rate from the US Labor Department. These reports are key to determine expectations on the timing of the next Fed rate hike.

The CME Group’s FedWatch tool shows that market participants are currently pricing in more than a 50 percent probability of a rate increase by December.

OIL

Oil futures were lower in early trading hours on Friday, with the latest stockpiles reports cheering investors as they await the weekly oil rig count.

The US West Texas Intermediate oil futures traded at $44.95 a barrel, up 1.27 percent from its prior close. Meanwhile, the London-based Brent crude oil futures eased 1.16 percent to trade at $45.55 a barrel as of 05:50 GMT.

On Thursday, oil prices settled higher in the light of a larger-than-expected reduction in crude stockpiles for the week ended June 30. According to the US Energy Information Administration, reserves fell by 6.3 million barrels, compared to an initially forecasted 2.3 million barrels drop.

The American Petroleum Institute had previously said that crude stockpiles dropped by 5.7 million barrels last week. API and EIA data is not always correlated.

Earlier this week, crude benchmarks fell more than 4 percent on the back of a report from Bloomberg saying Russia would not support the idea of expanding output cut levels.

Back in May, the Organization of Petroleum Exporting Countries agreed with Russia and other independent producers to cut output levels by 1.8 million barrels until March 2018.

The EIA report also showed a drop in gasoline inventories by 3.7 million barrels. Analysts had forecasted an increase of 1.067 million barrels. Distillate products also notched down by 1.85 million barrels, against an expected rise of 217,000 barrels.

Despite these figures, market sentiment remained under pressure due to ongoing concerns over the supply overhang promoted mainly by the continuous expansion of US production.

Ahead in the day, Baker Hughes will release its weekly oil rig count at 18:00 GMT.

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