Thursday, 17 August 2017

What’s next? – GOLD 17.08.17

Posted by Valentine at 11:13 Labels:

GOLD

Gold prices were higher in early trading hours on Thursday, as Fed’s minutes for July increased uncertainty over the future of monetary policy in world’s first economy.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.88 percent or $11.30 up at $1,294.20 a troy ounce as of 07:20 GMT.

The Federal Open Market Committee seems to be dealing with two strong positions regarding future plans for interest rates and the reduction of its massive balance sheet.

Some policymakers believe low inflation levels should prevent the regulator from rising rates in the near term, leaving them in a range between 1.00 and 1.25 percent for the time being.

However, others insisted on the fact that waiting too long to move interest rates could pose a threat for the economy as the policy normalization process has already begun.

Cleveland Fed President Loretta Mester said that inflation expectations are more stable, noting that are almost equal chances the Fed chooses to increase rates or take a breather.

Meanwhile, a business backlash against President Trump continued to weigh on market sentiment following recent incidents with white supremacist groups in Virginia.

Downbeat economic data also contributed to the yellow metal demand. Housing starts fell 4.8 percent last month to a seasonally adjusted annual rate of 1.16 million units.

Initial jobless claims, Philly Fed manufacturing index and industrial production figures will be released later in the session. FOMC Kaplan and Kashkari are also due to speak.

OIL

Oil prices were higher in Asian trade on Thursday as market participants did not miss a chance to open long positions following an overnight drop in the light of mixed inventory data.

The US West Texas Intermediate crude futures traded 0.09 percent higher at $46.82 per barrel as of 07:20 GMT, while the London-based Brent contracts on the ICE Futures Exchange in London were up 0.20 percent to $50.37 a barrel.

The Energy Information Administration said on Wednesday crude stockpiles fell by 8.9 million barrels in the week ended August 11, outperforming expectations for a 3 million barrels drop.

However, gasoline reserves rose by 22,000 barrels last week, against an initially forecasted 1.1 million barrels. These figures expose a weaker-than-expected demand for gasoline in what is considered one of the busiest periods for the country, the summer driving season.

Distillate products stockpiles were up by 702,000 barrels. Market analysts had estimated a decline of 572,000 barrels. The report also showed weekly oil production at 9.502 million barrels per day, rising by 79,000 bpd only last week.

While crude inventories are turning to the downside, the rise of crude production in the United States is still a big question for investors. Especially as OPEC’s efforts don’t make an impact.

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