Thursday, 31 August 2017

What’s next? – GOLD, OIL 31.08.17

Posted by Anonymous at 10:20 Labels:

GOLD

Gold futures were down in Asian hours on Thursday as market sentiment continued to improve as data showed an unexpected upturn in economic growth.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.45 percent or $5.90 down at $1,308.20 a troy ounce as of 05:20 GMT.

The yellow metal settled lower on Wednesday, retreating from an 11-month peak in the light of easing geopolitical concerns, upbeat economic data from the United States.

Tensions in the Korean peninsula eased following a meeting of the UN Security Council late Tuesday. The fifteen members of the council condemned the latest North Korean missile launch, which violated UNSC resolutions and broke into Japan’s airspace.

Bullion prices rose sharply earlier this week as President Donald Trump said that “all options” were on the table to address the Korean crisis.

In economic news, ADP employment change for August showed a 237,000 jobs build against an expected increase of 185,000. This report anticipates official nonfarm payrolls figures from the Labor Department, which will be released on Friday.

Market players pay attention to labor data as it’s one of Fed’s key metrics to justify monetary policy adjustment, such as interest rate hikes.

According to Fed funds tracked by CME Group’s FedWatch tool, investors are pricing less than a 40 percent chance of a 25 basis points rate hike by December.

In a separate report, the Commerce Department upgraded the second-quarter gross domestic product from 2.6 percent to 3.0 percent, above expectations of a 2.8 percent revision.

A rising rate environment makes gold less attractive for investors as it increases the value of its denomination currency while dampening demand for non-yielding assets.

OIL

Crude oil prices moved to the downside in early trading hours on Thursday as concerns over a potential reduction in gasoline consumption weighed on market sentiment.

The US West Texas Intermediate crude futures traded 0.09 percent lower at $45.92 per barrel as of 05:20 GMT, while the London-based Brent contracts on the ICE Futures Exchange in London were down 0.08 percent to $50.82 a barrel.

Oil benchmarks settled in red territory on Wednesday, as the tropical storm Harvey continued to keep US refineries inoperative, while official inventories from the Energy Department showed a nine straight weekly decline in crude stockpiles.

The situation in the Gulf Coast remains critical due to continuous heavy flooding affecting key refineries. Ten oil plants along the coast were forced to shut down operations to date.

Experts noted that shutting down refineries could have a cascade effect on production as oil companies would face a hard time finding other places to send their crude for processing.

To prevent shortage, the Environmental Protection Agency said on Wednesday it will allow sale of gasoline that does not comply with the Clean Air Act in a dozen states.

The Energy Information Administration said crude inventories dropped 5.4 million barrels in the week ended August 25, outperforming expectations of a 1.9 million barrels decline.

The report also showed gasoline supplies rising by 35,000 barrels against a forecasted drop of 989,000 bls. Distillates added 748,000 bls while analysts predicted a 846,000 barrels draw.
A day earlier, the American Petroleum Institute said crude inventories fell by 5.8 million barrels. Now traders will be looking ahead to a fresh oil rig count from Baker Hughes on Friday.

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