Tuesday, 26 September 2017

What’s next? – GOLD, OIL 26.09.17

Posted by Valentine at 01:15 Labels:

GOLD

Gold futures extended gains in early trading hours on Tuesday in the light of rising pressure in the Asian region as North Korea and the US seem at the verge of a war.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.33 percent higher at $1,315.80 a troy ounce as of 04:50 GMT.

The yellow metal settled with strong gains on Monday as renewed geopolitical tensions in the Korean Peninsula boosted safe-haven demand following remarks from North Korean Foreign Minister Ri Yong Ho saying Pyongyang has the right to attack US bombers.

"Since the United States declared war on our country, we will have every right to make countermeasures, including the right to shoot down United States strategic bombers even when they are not inside the airspace border of our country," said Ri Yong.

“The whole world should clearly remember it was the US who first declared war on our country." said Ri Yong in New York as a response to President Donald Trump’s tweet that “North Korea won’t be around much longer”.

The precious metal is now recovering positions after finishing last week to the downside after the Federal Reserve hinted on a third rate hike by end of this year and announced it will begin unwinding its massive $4.5 trillion balance sheet in October.

The metal is very sensitive to interest rate changes. Rising interest rates weigh on safe-haven assets such as bullion, while increasing demand for the greenback.

According to Fed funds tracked by CME Group’s FedWatch tool, traders are currently pricing in a 71.4 percent probability of a 25 basis points rate hike by December.

Ahead in the day, attention will be mainly directed to the speech of Federal Reserve Chairwoman Janet Yellen, who is due to speak as of 19:30 GMT. Investors will closely monitor her words in search for hints on the future of monetary policy.

OIL

Oil prices edged up in Asian trade on Tuesday as market players prepared for industry estimates on crude stockpiles.

The US West Texas Intermediate crude futures were trading 0.08 percent lower at $52.26 per barrel as of 04:50 GMT, while the London-based Brent contracts were up 0.51 percent to trade at $59.32 per barrel on the ICE Futures Exchange.

Market participants will be pending on the release of crude and refined products stockpiles by the American Petroleum Institute late on Tuesday. This report comes in anticipation to official figures from the US Energy Information Administration on Wednesday.

Crude benchmarks settled in green territory on Monday amid rising speculation that OPEC and its allies will agree to extend the so-called output reduction deal rather soon.

Russian Energy Minister Alexander Novak had previously said January 2018 was the earliest date for a revision on the current agreement, but experts believe a decision is coming sooner.

The focus for investors is on whether the oil cartel will change the target volume of cuts of 1.8 million barrels per day or leave them untouched at the level defined in November 2016.

The Organization of the Petroleum Exporting Countries and its allies met in Vienna last week to discuss a potential extension of the production deal beyond its March 2018 deadline. The decision was postponed and negotiation is likely to continue at the next meeting in November.

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