Thursday, 14 September 2017

What’s next? – GOLD, OIL 14.09.17

Posted by Valentine at 11:11 Labels:

GOLD

Gold futures were lower in early trading hours on Thursday, with market players turning their heads to the Bank of England monetary meeting and the release of US consumer inflation data.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.18 percent or $2.40 up at $1,325.60 a troy ounce as of 07:15 GMT.

Today, market attention will be mainly directed to consumer inflation figures in the United States. The CPI for August will be published as of 12:30 GMT, with a 0.3 percent build eyed.

Traders will carefully assess inflation dynamics to better estimate the probability of a third rate hike by the end of 2017, as well as the unwinding of Fed’s massive balance sheet.

According to Fed funds tracked by CME Group’s FedWatch program, investors are currently pricing in a 41 percent probability of a 25 basis points rate hike by December.

On Wednesday, the producer price index came in below expectations, rising 0.2 percent, compared to an initially forecasted 0.3 percent increase.

While downbeat data weighed on the dollar at first, the American currency was able to recover following reports that a tax plan outline will be released on September 25.

The US dollar index, which gauges the greenback against a basket of six major rivals, was 0.09 percent lower at 92.18 by the time of this writing.

Gold is a dollar-denominated metal and a stronger greenback makes it less attractive for investors holding foreign currencies. Also, a rising rates environment dampens demand for safe-haven non-yielding assets such as the yellow metal.

OIL

Oil prices edged down in early trading hours on Thursday as players continued to digest downbeat inventory data from the United States.

The US West Texas Intermediate crude futures were trading 0.24 percent lower at $49.18 per barrel as of 07:10 GMT, while the London-based Brent contracts were down 0.36 percent to trade at $54.96 per barrel on the ICE Futures Exchange.

On Wednesday, crude benchmarks settled in green territory as downbeat inventory data from the US Energy Information Administration was counteracted by reports signaling that global oil demand in 2017 is expected to climb the most in the last two years.

The International Energy Agency revised its demand forecast for 2017 by 100,000 barrels per day to 1.6 million barrels per day. The organization said the supply imbalance in the market is likely to narrow in the near future.

“Demand growth continues to be stronger than expected, particularly in Europe and the U.S.,” wrote the Paris-based agency in its monthly report.

The US Energy Department said crude stockpiles increased by 5.9 million barrels in the week ended September 8, far above the originally predicted rise of 3.2 million barrels.

As for gasoline reserves, the count went down by 8.4 million barrels, outperforming expectations for a 2 million barrels drop, while distillate products saw a 3.2 million barrels draw.

The fall in gasoline inventories was seen as a reacting to tropical storm Harvey, which forced key refineries in the US to close doors a few days due to heavy flooding.

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