Friday, 4 August 2017

What’s next? – GOLD, OIL 04.08.17

Posted by Valentine at 08:58 Labels:

GOLD

Gold futures were near seven-week highs, around breakeven levels in early trading hours on Friday, as market participants looked ahead of key employment data later in the day.

Nonfarm payrolls for July, along with the unemployment rate and average hourly earnings will be available as of 12:30 GMT today. Labor market data is relevant for traders as it provides extra guidance on future Federal Reserve decision on monetary policy.

According to Fed funds tracked by CME Group’s FedWatch tool, market players are currently pricing in a 42.5 percent probability of a third rate hike by December.

On the Comex division of the New York Mercantile Exchange, gold futures were trading at $1,274.20 a troy ounce as of 05:15 GMT.

Market analysts warned about low activity levels ahead of jobs data as the importance of these figures pushed investors to cautious positioning.

Dollar-denominated gold is sensitive to interest rate hikes, which increase the opportunity cost of holding non-yielding assets such as the precious metal, while also boosting the greenback.

On Thursday, the US Labor Department said people claiming unemployment benefits fell by 5,000 to a seasonally adjusted 240,000 in the week ended July 28.

The US dollar index, which gauges the greenback against a basket of six major rivals, traded at 92.59, easing 0.13 percent by the time of this writing.

Earlier this week, the yellow metal rose on the back of ADP employment change, which fell short from expectations, showing a smaller-than-expected jobs build in July.

OIL

Oil futures moved lower in Asian hours on Friday as market players awaited a fresh oil rig count later in the day, while remaining cautions ahead of an OPEC meeting next week.

The US West Texas Intermediate crude futures traded 0.14 percent lower at $48.96 per barrel as of 05:15 GMT, while the London-based Brent contracts on the ICE Futures Exchange in London were down 0.13 percent to $51.94 a barrel.

On Thursday, crude prices settled to the downside as concerns over the ability of the Organization of the Petroleum Exporting Countries to rebalance the ongoing oil overhang increased ahead of a meeting of energy leaders next week.

Earlier this week, crude benchmarks counted on small support from stockpiles figures, as a fifth-straight weekly draw was reported, although slowdown signals were spotted.

The US Energy Department said crude stockpiles dropped by 1.5 million barrels in the week ended July 28, missing expectations for a 2.9 million barrels reduction.

Analysts believe sideways trading is likely until strong events are presented to the scene. WTI contracts for September delivery dropped 1.1 percent to close Thursday’s session around $49.03 per barrel, while the Brent fell 0.63 percent to finish at $52.03 a barrel.

In May, OPEC members and a group of independent producers agreed to extend the output cuts agreement for nine months until March 2018 for a volume of 1.8 million barrels per day.

Now traders are expecting a revision of such volume, with chances pointing at an expansion. An eventual increase of cuts volumes could provide a rapid upward impulse to both benchmarks.

Ahead in the session, oilfield service provider Baker Hughes will release its weekly oil rig count as of 17:00 GMT. The total count is currently standing at 766 units.

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