Wednesday, 16 August 2017

What’s next? – GOLD, OIL 16.08.17

Posted by Anonymous at 11:18 Labels:

GOLD

Gold futures extended losses in Asian trade on Wednesday, as tensions in the Korean peninsula continued to ease and traders focused on the release of FOMC minutes.

Attention is now directed to building permits and housing starts for July at 12:30 GMT and the release of the latest FOMC minutes as of 18:00 GMT.

The document will serve to assess expectations for a potential rate hike later this year. According to Fed funds tracked by CME Group’s, the probability for a 25 basis point December rate move stands at 46.8 percent.

At the July policy meeting, FOMC officials opted to leave rates unchanged in a range between 1.00 and 1.25 percent. However, they said a third hike was still part of the plan.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.23 percent or $2.90 lower at $1,276.80 a troy ounce as of 06:30 GMT.

The US Commerce Department said on Tuesday retail sales increased 0.6 percent in July, above an initially estimated 0.4 percent build. The export and import price indexes showed a 0.4 percent and 0.1 percent growth respectively, against a 0.2 percent and 0.1 percent seen.

Other news included the New York State manufacturing index, which moved to 25.20, comfortably above a modest 10.00 expectation. Business inventories added 0.5 percent.

The yellow metal fell yesterday following a confirmation that North Korean leader Kim Jong-un has suspended a plan to fire four missiles to Guam, an unincorporated territory of the US.

Dollar-denominated gold is sensitive to US rate hikes as they increase the opportunity cost of holding non-yielding assets such as bullion, while boosting demand for the greenback.

OIL

Oil prices moved higher on Wednesday as market players were cheered by an upbeat industry report on crude stockpiles, while looking ahead of official data later in the day.

The American Petroleum Institute (API) reported a 9.16 million barrels drop for the week ended August 11, compared to expectations for a 3.1 million barrels reduction. This report marked an eleventh consecutive weekly decline in reserves.

However, gasoline supplies did not count with the same luck, adding 301,000 barrels against a forecasted decline of 1.1 million barrels last week.

Ahead in the session, the US Energy Information Administration will release at 14:00 GMT its weekly report on crude and refined products inventories.

The US West Texas Intermediate crude futures traded 0.36 percent higher at $47.72 per barrel as of 07:00 GMT, while the London-based Brent contracts on the ICE Futures Exchange in London were up 0.41 percent to $51.01 a barrel.

Market participants are still worried about the future of OPEC’s agreement to cut its production by 1.8 million barrels per day until March 2018. While the deal is still active, compliance seems to be weaker than expected, while US shale oil production rose 12 percent since mid-2016.

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