Monday, 14 August 2017

What’s next? – GOLD, OIL 14.08.17

Posted by Anonymous at 10:53 Labels:

GOLD

Gold futures moved slightly higher in Asian hours on Monday, with regional economic data leading the headlines, while the Korean crisis continued to weigh on risk-on sentiment.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.07 percent or $0.90 lower at $1,293.10 a troy ounce as of 07:10 GMT.

Earlier in the session, China reported an 8.3 percent increase of fixed-asset investment in July, compared to expectations for an 8.6 percent reading. Industrial production rose 6.4 percent, falling short from an estimated 7.2 percent. Retail sales grew 10.4 percent vs 10.8 percent seen.

Also, Japan said its economy expanded in 4.0 percent on yearly basis, outperforming an estimated growth rate of 2.5 percent. Last quarter, the Nippon gross domestic product rose by 1.0 percent, comfortably above a forecasted 0.6 percent build.

Traders of the yellow metal will keep an eye on the release of Fed’s latest meeting minutes on Wednesday as they search for hints on the future of monetary policy.

According to Fed funds tracked by CME Group’s FedWatch tool, traders are currently pricing in a 42.2 percent probability of a third 25-basis points rate increase by December.

Also, inflation and employment data from the United Kingdom will be in focus as market participants assess the impact of Brexit negotiations.

Last Friday, the US Labor Department said consumer prices rose by 0.1 percent in July, leaving the annual increase in the CPI at 1.2 percent, still far from Fed’s 2.0 percent target.

The precious metal is sensitive to changes in Fed’s short term interest rates, which lift the opportunity cost of holding non-yielding assets such as gold.

OIL

Oil benchmarks were down in Asian trade on Monday as market players opted for a cautious positioning ahead of this week’s crude inventories data and as expectations for a higher demand rose in the light of Japan’s upbeat economic data.

The US West Texas Intermediate crude futures traded 0.18 percent lower at $48.73 per barrel as of 07:10 GMT, while the London-based Brent contracts on the ICE Futures Exchange in London were down 0.35 percent to $51.92 a barrel.

Earlier in the session, China reported an 8.3 percent increase of fixed-asset investment in July, compared to expectations for an 8.6 percent reading. Industrial production rose 6.4 percent, falling short from an estimated 7.2 percent. Retail sales grew 10.4 percent vs 10.8 percent seen.

Also, Japan said its economy expanded in 4.0 percent on yearly basis, outperforming an estimated growth rate of 2.5 percent. Last quarter, the Nippon gross domestic product rose by 1.0 percent, comfortably above a forecasted 0.6 percent build.

Oil futures settled in green territory on Friday as Baker Hughes reported a moderate addition of three rigs operating in the United States, leaving the total count at 768 units.

Last week, the US Energy Information Administration reported a much larger-than-expected reduction of crude inventories. According to data, reserves fell by 6.5 million barrels in the week ended Aug 4, compared to an estimated drop of 2.7 million barrels.

However, the initial positive impulse was capped by an unexpected build of 3.4 million barrels in gasoline stockpiles, despite the still ongoing summer driving season.

Geopolitical tensions in the Korean peninsula are far from over and they are likely to continue weighing on market sentiment for the time being.

Also, investors are worried about the future of OPEC’s output cuts agreement, which currently counts on a 75 percent compliance of its members, according to the International Energy Agency. The oil cartel said production grew by 173,000 bpd in July to 32.87 million bpd.

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