Friday, 29 September 2017

What’s next? – GOLD, OIL 29.09.17

Posted by Valentine at 11:04 Labels:

GOLD

Gold prices were showing little changes in Asia as sentiment was affected by mixed data, while cautiousness and profit taking ahead of the weekend offered moderate support.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.02 percent lower at $1,288.40 a troy ounce as of 05:20 GMT.

The yellow metal ended Thursday flat, as US dollar corrected downwards on profit taking but with bullion still under pressure amid rising expectations for further monetary tightening.

The US dollar index, which gauges the greenback against a basket of six major rivals, was trading at 93.05 by the time of this writing, adding 0.13 percent.

Gold prices fell below the $1300 mark earlier this week as Federal Reserve Chairwoman Janet Yellen warned about the risks of adjustment monetary policy “too gradually”.

Her comments pushed expectations for a third rate hike by the end of this year. A rising rate environment plays out negatively for the metal as investors turn into high yielding assets.

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.

The precious metal also fluctuated on the release of mixed economic reports in the United States. The final revision of the second quarter gross domestic product showed a 3.1 percent economic expansion in the April-June period, according to the Commerce Department.

Meanwhile, the Labor Department said initial jobless claims rose by 12,000 to a seasonally adjusted 272,000 in the week ended September 22. Analyst forecasted a 10,000 build.

Ahead in the day, traders will be paying attention to a batch of key data scheduled for release, including Germany’s employment change and retail sales, UK Q2 GDP, EU’s CPI, the US PCE index, personal spending and consumer sentiment.

Attention will also be directed to remarks from the European Central Bank President Mario Draghi and Bank of England Governor Mark Carney.

OIL

Oil prices were mixed in early trading hours on Friday, as market participants prepared to receive the weekly US rig count later in the session.

The US West Texas Intermediate crude futures were trading 0.19 percent lower at $51.46 per barrel as of 05:20 GMT, while the London-based Brent contracts were up 0.16 percent to trade at $57.50 per barrel on the ICE Futures Exchange.

Crude benchmarks settled in red territory on Thursday as investors opted to take profits in multimonth highs following an upbeat stockpiles report which supported prices earlier this week.

The US Energy Information Administration reported on Wednesday a 1.8 million barrels reduction for the week ended September 22. Analysts had forecasted a 3.4 million barrels build.

Also supporting crude prices were expectations for an extension of OPEC’s production agreement beyond its March 2018 deadline. OPEC and its allies agreed in May to prolong the output deal initially signed in November 2016 for a nine months period.

The political sphere also played its part, with Turkey saying it will only deal with the Iraqi government after Kurdistan voted to move forward with its independence.

Most oil exchange go through a pipeline from northern Iraq to Turkey. The crude comes from Kurdish sources and if Ankara would block such operations, the Kurdish Regional Government might face serious economic challenges in the near future.

Oil prices are on track to mark weekly gains for a fourth consecutive week as the American refining industry continues to stabilize after hurricane Harvey.

Oilfield services Baker Hughes will present its weekly oil rig count as of 17:00 GMT on Friday.

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