Friday, 22 September 2017

What’s next? – GOLD, OIL 22.09.17

Posted by Valentine at 11:09 Labels:

GOLD

Gold futures were higher in early trading hours on Friday as geopolitical tensions rose following North Korea’s threat to test a nuclear bomb on the Pacific Ocean.

North Korean Foreign Minister Ri Yong Ho said his country is considering the launch of a hydrogen bomb of an unprecedented scale.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.39 percent higher at $1,299.90 a troy ounce as of 07:20 GMT.

The yellow metal settled to the downside on Thursday as market participants continued to digest a series of monetary policy announcement by the Federal Reserve.

Earlier this week, Fed Chairwoman Janet Yellen said a third rate hike in 2017 was still likely to happen in the upcoming months. The US regulator left interest rates in a range between 1.00 and 1.25 percent and will begin to unwind its massive $4.5 trillion balance sheet in October.

According to Fed funds tracked by CME Group’s FedWatch tool, traders are currently pricing in a 70.5 percent probability of a 25 basis points rate hike by December.

The latest Fed dot plot, a graphic that shows the position of each member of the Federal Open Market Committee in regard to further interest rates adjustments, concluded that most policymakers see a range between 1.25 percent and 1.50 percent to end 2017.

A rising interest rates environment increases demand for the greenback. As gold is a dollar-denominated asset, this makes it more expensive for investors holding foreign currencies.

OIL

Oil prices edged up in Asia on Friday as market participants prepared for a fresh weekly rig count, while looking ahead to a meeting of OPEC and non-OPEC ministers.

Geopolitics are also taking a leading role in the session, as North Korean Foreign Minister Ri Yong Ho said his country would consider testing a hydrogen bomb of an unprecedented scale in the Pacific Ocean. His remarks came in following Trump’s hardline speech at the UN.

The US West Texas Intermediate crude futures were trading 0.32 percent higher at $50.71 per barrel as of 07:20 GMT, while the London-based Brent contracts were up 0.21 percent to trade at $56.55 per barrel on the ICE Futures Exchange.

Crude benchmarks settled in red territory on Thursday as market players continued to digest downbeat inventory data from the US Energy Information Administration.

The agency said crude stockpiles rose by 4.6 million barrels in the week ended September 15, above an initially estimated 3.4 million build. Gasoline inventories fell by 2.13 million barrels, missing by little the forecasted 2.14 million barrels decline. Distillates dropped by 5.7m/b.

Oil prices are currently finding support in rumors that the Organization of the Petroleum Exporting Countries is negotiating a potential extensions to its production-cuts deal.

Members of the oil cartel led by Saudi Arabia are gathering in Vienna on Friday to assess the impact of extending the agreement beyond its deadline in March 2018.

OPEC and non-OPEC producers agreed to extend the deal for a nine month period back in May, adding to the original six month duration, but leaving volume at 1.8 million barrels per day.

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