Monday, 21 August 2017

What’s next? – GOLD, OIL 21.08.17

Posted by Valentine at 10:35 Labels:

GOLD

Gold futures were slightly lower in Asian hours on Monday, with traders awaiting a key meeting of central bank leaders in the United States later this week.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.12 percent or $1.60 up at $1,293.20 a troy ounce as of 07:25 GMT.

Market attention will be mainly directed to the Jackson Hole symposium, an annual event organized by the Federal Reserve and that gathers policymakers from all around the globe.

Last week, the European currency took a hit as reports said European Central Bank President Mario Draghi will not be talking on concrete policy measures during the conference.

Investors believe the ECB will rather wait until fall, once Germany elections are left behind, to promote any changes to its current policy configuration. For instance, reducing the regulator’s massive 60-billion-euro-per-month bond buying program.

The yellow metal reached a nine months peak as uncertainty took over in Washington after several chief executive officers left Trump’s business councils. The president had said not only white supremacists were to blame for Charlottesville violence.

Gold also rose in reaction to two terrorist attack conducted in Catalunya, Spain. The precious metal is a safe-haven asset, used by investors to avoid periods of market instability.

As fears that the Trump administration won’t be able to push economic reforms in Congress, the US dollar retreated on Friday, which is seen as positive for gold prices.

Gold is a dollar-denominated metal. A weaker currency makes it cheaper for market participants holding foreign currencies and therefore, a better trade opportunity for them.

OIL

Oil prices notched down in early trading hours on Monday as US crude production continued to rise, but losses were limited by a noticeable drop in crude stockpiles.

The US West Texas Intermediate crude futures traded 0.25 percent lower at $48.54 per barrel as of 07:25 GMT, while the London-based Brent contracts on the ICE Futures Exchange in London were down 0.30 percent to $52.56 a barrel.

On Friday, oilfield services provider Baker Hughes said US crude producers cut by five the total of oil rigs operating in the United States to 763 units.

Earlier, the Energy Information Administration (EIA) reported a 8.9 million barrels reduction for the week ended August 11, which came above expectations for a 3 million barrels draw.

Nevertheless, gasoline stockpiles were up by 22,000 barrels, against a forecasted 1.1 million barrels drop. Distillate products stockpiles increased by 702,000 barrels.

Last week, the US Energy Department said crude production rose to its highest level since 2015 at 9.502 million barrels per day, adding 79,000 barrels per day from a prior week.

In the days ahead, traders will keep an eye on fresh weekly crude and refined products inventories from the American Petroleum Institute on Tuesday and the EIA on Wednesday.

Market participants are also monitoring any developments concerning OPEC’s output cuts. Saudi Arabia oil minister and OPEC’s de facto leader said the volume of cuts could be extended but not as a unilateral measure. The cartel agreed to extend its deal until March 2018.

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