Friday, 11 August 2017

What’s next? – GOLD, OIL 11.08.17

Posted by Valentine at 10:31 Labels:

GOLD

Gold prices held gains in Asian hours on Friday as there are currently no signs pointing at a possible reduction of tensions between Pyongyang and Washington

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.16 percent or $2.00 higher at $1,292.10 a troy ounce as of 05:50 GMT.

The yellow metal rose to two-month highs on Thursday, as economic data from the United States didn’t support the case for a third rate hike later this year, while geopolitical concerns continued to weigh on market sentiment, increasing demand for safe-haven assets.

Earlier this week, North Korea said it was “carefully examining” the possibility of launching a missile strike on Guam, an unincorporated territory of the US in the western Pacific Ocean.

The US Labor Department said the producer price index dropped by 0.1% in July, while the core index, which excludes food, energy and trade, remained flat. The index missed a forecasted increase of a 0.1 percent, pushing down expectations for further rate adjustments in 2017.

New York Fed President William Dudley said on Thursday that the Federal Reserve remains on track to hike interest rates again and start reducing bond holdings this year.

"Our outlook anticipates a continued moderate growth trend, with some further strengthening in the labor market and an increase in inflation over the medium term toward our objective of 2 percent," Dudley stated in prepared remarks.

Other economic new included initial jobless claims, which were up by 3,000 in the week ended August 4 to a seasonally adjusted 244,000. Analyst had expected a 240,000 reading.

Ahead today, attention will be directed to the release of July’s CPI at 12:30 GMT, as well as comments by FOMC Kaplan and Kashkari as of 13:40 GMT and 15:30 GMT respectively.

OIL

Crude oil prices sank in early trading hours on Friday, despite a upbeat inventory data from the United States as concerns over OPEC’s ability to counteract the output glut continued to weigh.

The US West Texas Intermediate crude futures traded 0.82 percent lower at $48.19 per barrel as of 06:35 GMT, while the London-based Brent contracts on the ICE Futures Exchange in London were down 0.71 percent to $51.53 a barrel.

Geopolitical tensions between North Korea and the United States also kept investors locked in a cautious positioning, especially after Pyongyang said it was “carefully examining” a plan to strike Guam, a key strategic territory of the US located in the western Pacific Ocean.

Earlier this week, the US Energy Information Administration reported a 6.5 million barrels reduction of inventories in the week ended Aug 4, against expectations for a 2.7 million barrels drop. However, an unexpected 3.4 million barrels build in gasoline stockpiles capped gains.

In the light of such figures, oil benchmarks had risen to a two-and-a-half month peak. But later corrected downwards, closing 1.5 percent to the downside over crude supply concerns.

Meanwhile, the Organization of the Petroleum Exporting Countries said its crude production increased by 173,000 barrels per day in July to 32.87 million barrels per day.

Saudi Arabia Energy Minister Khalid al-Falih said early on Friday that the kingdom doesn’t rule out another output cut although he stressed such action would not be an unilateral one.

Ahead in the day, Baker Hughes will present its weekly oil rig count on Friday as of 17:00 GMT.

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