Tuesday, 12 September 2017

What’s next? – GOLD, OIL 12.09.17

Posted by Valentine at 11:43 Labels:

GOLD

Gold futures continued to fall on Tuesday, extending previous session losses in the light of softer concerns over hurricane Irma potential damages and as geopolitical tensions eased.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.42 percent or $5.60 down at $1,330.10 a troy ounce as of 07:10 GMT.

The yellow metal settled lower on Monday as hurricane Irma was downgraded to a Category 2 storm and geopolitical concerns eased following North Korea’s founding holiday.

Over the weekend, Pyongyang opted not to test any missile despite the celebration of the 69th anniversary of its founding. However, the North Korean government threatened with a severe response to further sanctions from the United Nations Security Council.

Meanwhile, the impact of hurricane Irma was weaker than expected, although some cities such as Jacksonville suffered massive destruction due to heavy flooding. The authorities remained cautious, asking people to stay at their places or look for shelter.

The recovery of the US dollar also weighed on the precious metal. Gold is a dollar-denominated commodity and a stronger currency makes it less attractive for investors holding foreign money.

According to the Commodity Futures Trading Commission, bullish positioning on gold increased to 245,300 as of last Friday, the highest level in nearly a year.

Gold traders shifted their focus to the main macroeconomic events due later this week, including the Bank of England’s monetary policy meeting and inflation data from the United States.

OIL

Oil prices were trading lower in early hours on Tuesday, as market players weighed hurricane Irma’s negative effect on demand while refineries in the US continued to restart operations following hurricane Harvey.

The US West Texas Intermediate crude futures were trading 0.06 percent lower at $48.08 per barrel as of 07:10 GMT, while the London-based Brent contracts were down 0.06 percent to trade at $53.81 per barrel on the ICE Futures Exchange.

Crude benchmarks settled in green territory on Monday, as investors were cheered following Saudi Arabia’s decision to hold negotiations with other nations about a potential deal to extend the so-called output cuts deal beyond March 2018.

Saudi Arabia’s energy minister and OPEC’s de facto leader Khalid al-Falih gathered with his counterparts from Venezuela and Kazakhstan to discuss the terms of such initiative.

Earlier this year, OPEC and non-OPEC nations agreed to extend the production cuts agreement until March 2018, with a target daily reduction of 1.8 million barrels.

Market sentiment was also supported by a weaker-than-expected hurricane Irma, which made landfall in the US on Sunday morning and has been downgraded to a Category 2 storm.

Market analysts said Irma is not expected to produce negative effects on oil production or processing, but it could have some impact on demand levels.

Ahead in the day, traders will focus on the release of monthly reports from the OPEC and the International Energy Agency, as well as inventories data from the American Petroleum Institute.

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