Wednesday, 30 August 2017

What’s next? – GOLD, OIL 30.08.17

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GOLD
Gold prices moved lower in Asian hours on Wednesday as the UN Security Council did not announce further sanctions against North Korea, but reinforced the idea that Kim Jong-un’s ballistic and nuclear programmes must come to an end soon.
On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.16 percent or $2.10 down at $1,316.80 a troy ounce as of 05:10 GMT.
The yellow metal held near an eleven-month peak overnight Tuesday, as geopolitical tensions in the Korean peninsula continued to support safe-haven demand.
Bullion prices rose more than one percent in the previous session to reach a local high of $1,331.18 a troy ounce following a new missile launch by North Korea.
The ballistic missile flew over Japan, rising concerns among Asian nations about a possible attack on their territories. Prime Minister Shinzo Abe assured Japan will take “full steps” to ensure the safety of its people.
The precious metal usually benefits from periods of high uncertainty. In the current scenario, the dollar has also been playing an important role to support the upward move.
The US dollar index, which tracks the greenback against six major rivals, was trading at 92.25 by the time of this writing, adding 0.07 percent.
The American currency came under pressure due to the political turmoil in Washington, as well as the speech from Federal Reserve Chairwoman Janet Yellen at the Jackson Hole symposium.
Fed’s chief disappointed market participants by not providing any hints over monetary policy plans, pushing down expectations for a third rate hike later this year.
According to Fed funds tracked by CME Group’s FedWatch tool, investors are pricing less than a 40 percent chance of a rate move by December.
In economic news, he Consumer Confidence Index for August moved to 122.9, outperforming expectations for a drawdown.
Ahead in the day, traders will be looking at ADP nonfarm employment figures and a revision of the second-quarter GDP by 12:15 GMT and 12:30 GMT respectively.
OIL
Oil futures edged down in early trading hours on Wednesday, with market participants looking ahead to official crude inventories and as Harvey has broken new rainfall records.
The US West Texas Intermediate crude futures traded 0.28 percent higher at $46.31 per barrel as of 05:00 GMT, while the London-based Brent contracts on the ICE Futures Exchange in London were down 0.40 percent to $51.79 a barrel.
Crude benchmarks settled in red territory for the second consecutive session, as tropical storm Harvey continued to undermine US refining capacity.
Ten oil refineries along the Gulf Coast were shut down, including ExxonMobil's Baytown plant, which has reportedly suffered several damages due to heavy flooding.
According to latest reports, nearly 3 million barrels per day in refining capacity had been shut due to heavy flooding affecting the Gulf Coast, America’s energy heart.
With major refining facilities shut down until further notice, market participants fear of a possible excess of crude oil in the country for coming weeks.
Against the odds, oil prices sank as the storm hit Houston, one of the largest cities in the US, rising concerns about lower gasoline consumption.
Overnight, the American Petroleum Institute said US crude stockpiles dropped by 5.8 million barrels in the week ended August 25. Analysts predicted a 1.9 million barrels draw.
Data also showed gasoline inventories moving up by 480,000 barrels and distillate products falling by 490,000 barrels. Cushing oil supplies increased by 580,000 barrels.

Ahead in the session, investors will be paying attention to official data from the US Energy Information Administration, with a ninth-straight weekly drop eyed

Fort Financial Services

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