Tuesday, 22 August 2017

What’s next? – GOLD, OIL 22.08.17

Posted by Valentine at 10:44 Labels:

GOLD

Gold prices dropped in early Asian trade on Tuesday as President Donald Trump made public a strategy to keep American troops in Afghanistan, while asking key partners such as India and his regional rival Pakistan to do more to support Kabul.

"We appreciate India's important contributions to stability in Afghanistan but India makes billions of dollars in trade from the United States and we want them to help us more with Afghanistan, especially in the area of economic assistance and development."

Speaking at Fort Myer in Arlington, Virginia, Trump also said Pakistan has turned into a safe home for terrorist, calling for an immediate change.

"We have been paying Pakistan billions and billions of dollars, at the same time, they are housing the very terrorists we are fighting ... that must change immediately."

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.19 percent or $2.40 down at $1,294.30 a troy ounce as of 04:25 GMT.

The yellow metal settled in green territory on Monday in the light of a weaker dollar, pressure by rising tensions in the Korean peninsula, as the US kicked off a new series of joint military drills with South Korea, a key regional ally.

Earlier, North Korean leader Kim Jong-un said the US-South Korea military exercises were a “reckless behavior driving the situation into the uncontrollable phase of a nuclear war.”

Gold is a safe-haven asset, meaning investors use it to protect their capital against periods of instability, uncertainty and high volatility. Plus, it is dollar-denominated, which makes it even more attractive for players holding foreign currencies as the greenback losses power.

OIL

Oil prices moved higher in early trading hours on Tuesday following Donald Trump has unveiled a strategy to keep American troops in Afghanistan, assuring his administration is strongly committed to continue supporting Kabul and asked for India and Pakistan collaboration.

The US West Texas Intermediate crude futures traded 0.38 percent higher at $47.71 per barrel as of 05:15 GMT, while the London-based Brent contracts on the ICE Futures Exchange in London were up 0.33 percent to $51.83 a barrel.

Ahead in the session, the American Petroleum Institute is set to present its weekly report on crude and refined products inventories, in anticipation of official data from the US Energy Information Administration on Wednesday.

As for last week, analysts forecasted a 3.375 million barrels reduction in crude stockpiles, while a 300,000 barrels draw in gasoline supplies and a 38,000 barrels build in distillates.

Crude benchmarks started the week under pressure as concerns over OPEC’s inability to counteract an ongoing supply overhang weighed on prices. According to the Paris-based International Energy Agency, compliance with the deal was about 75 percent last month.

OPEC and non-OPEC producers agreed to extend the output cuts of 1.8 million barrels per day initiated in November 2016 for a nine-month period until March 2018.

Traders are also worried about demand levels, considering the US driving season is about to end and gasoline supplies haven’t reacted to the downside as expected.

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