Tuesday, 11 July 2017

What’s next? – GOLD, OIL 11.07.17

Posted by Anonymous at 10:18 Labels:

GOLD

Gold futures were down in Asian hours on Tuesday, returning previous session gains as the risk-on sentiment continued to strengthen across equity markets.

On the Comex division of the New York Mercantile Exchange, gold futures were down by 0.20 percent to trade at $1,210.80 a troy ounce as of 07:47 GMT.

Attention is now directed to the testimony of Fed Chair Janet Yellen on Wednesday and Thursday on monetary policy. Traders are hoping for fresh hints on the future of interest rates.

According to CME Group’s FedWatch tool, investors are pricing in a 50.9 probability for a Fed rate hike by December to a range between 1.25 - 1.50 percent.

On the data front, consumer price index and retail sales are scheduled on Friday and will be the most relevant publications of the week for gold traders. In case of a hawkish outcome, the metal could extend losses to new multi-month lows.

The US dollar index, which tracks the greenback against a basket of six major rivals, was 0.13 percent higher at 95.91 by the time of this writing.

Gold, a dollar-denominated commodity, is sensitive to changes on the greenback strength. A stronger currency makes the metal more expensive for investors holding foreign currencies.

Last week, gold fell under pressure following the release of strong labor market data. The Labor Department said the economy added 222,000 jobs in June vs an expected 179,000 jobs build.

OIL

Oil futures moved north in early trading hours on Tuesday, with traders awaiting for industry data on US crude and gasoline stockpiles to define a direction.

The US West Texas Intermediate oil futures traded at $44.70 a barrel, up 0.68 percent from its prior close. Meanwhile, the London-based Brent crude oil futures added 0.62 percent to trade at $47.17 a barrel as of 06:35 GMT.

The American Petroleum Institute (API) will release its weekly crude and refined products inventories for the week ended July 7 late in the afternoon. On Wednesday, the US Energy Information Administration will present its official report as of 14:30 GMT.

Overnight, oil benchmarks settled in green territory, although sentiment remained under pressure over increasing production levels in the United States, Nigeria and Libya.

Traders are doubting that OPEC-led output cuts will be able to counteract an ongoing supply overhang and push prices back down in the future.

The Organization of the Petroleum Exporting Countries and a group of independent producers led by Russia agreed in May to reduce their production levels by 1.8 million barrels per day until March 2018, extending for a nine-month period the deal originally signed in November 2016.

While the measure has a bullish nature for oil prices, traders felt disappointed that producers wouldn’t increase the cut volumes. Since the agreement, oil prices have been falling sharply.

On July 24, OPEC ministers and Russia will gather to evaluate the course of the deal and whether is necessary to increment the cut levels. However, sources related to the matter have recently explained that Russia wouldn’t be OK with doing so.

Nigeria, which is part of OPEC but has been authorized to stay out of the agreement, said it’s ready to talk about capping its production, if its political, economic and humanitarian situation is taking into account during negotiations.

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