Thursday, 12 October 2017

What’s next? – GOLD, OIL 12.10.17

Posted by Valentine at 11:54 Labels:

GOLD

Gold futures were higher in Asian hours on Thursday, with market participants looking ahead to further speeches from FOMC officials to weigh expectations for rate moves later this year.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.64 percent higher at $1,297.20 a troy ounce as of 07:10 GMT.

Gold futures settled near breakeven on Wednesday as geopolitical concerns eased but the dollar remained under pressure as labor market data undermined expectations for a Fed rate hike.

The yellow metal traded in a tight range as market players prepared for September minutes of the Federal Reserve, while political uncertainty in Spain promoted cautious positioning.

Catalonia’s President Carles Puigdemont opted to postpone the declaration of independence to open a period of dialogue with La Moncloa.

Minutes from the September meeting of the Federal Open Market Committee show policymakers expecting economic expansion and pointing at a potential third rate hike this year.

According to Fed funds tracked by CME Group’s FedWatch program, investors are pricing in a 81.7 percent chance of a 25 basis points interest rate hike by December.

Bullion counted on moderate support from the dollar weakness, which extended to the downside following a worse-than-expected Job Opening and Labor Turnover Survey (JOLTs) report.

Gold is sensitive to interest rate changes in United States as it is denominated in dollars. Higher interest rates strengthen the greenback and make the metal more expensive.

As for geopolitical tensions on the Korean peninsula, US President Donald Trump held a meeting with Secretary of Defense General James Mattis and the US military's top officer General Joseph Dunford to evaluate alternatives to respond to eventual threats by Pyongyang.

The US dollar index, which gauges the greenback against a basket of six major rivals, was trading at 92.68 by the time of this writing, 0.16 percent lower.

OIL

Oil futures were lower on Thursday early trading hours, with market players awaiting official inventory data from the United States later in the session.

The US West Texas Intermediate crude contracts were 0.70 percent down at $50.94 a barrel by 07:10 GMT. Elsewhere, Brent crude futures were down 0.68 percent at $56.55.

On Wednesday, crude benchmarks settled higher following the release of OPEC’s monthly report, in which the oil cartel said demand is expected to rise in 2018.

The Organization of the Petroleum Exporting Countries noted that the process to rebalance oil markets will continue, as demand is likely to increase by 30,000 barrels a day this and next year.

However, OPEC production rose by 90,000 barrels a day, increasing fears that compliance with the cartel’s output cuts agreement will start to wane.

In other news, US crude stockpiles rose 3.097 million barrels last week, said the American Petroleum Institute (API). Gasoline inventories dropped by 1.575 million barrels and distillates gained 2.029 million barrels.

OPEC and non OPEC producers agreed in May to extend the production deal beyond its June 2017 deadline for nine months. Later this month it will be decided if the deal will continue further.

Ahead in the day, the official inventories in the US will be available as of 14:30 GMT.

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