Tuesday, 17 October 2017

What’s next? – GOLD, OIL 17.10.17

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What’s next? – GOLD 17.10.17

Gold futures fell in early trading hours on Tuesday, moving below the psychological $1,300 mark as speculation mounted over a renewal of Janet Yellen’s Fed leadership for a second term.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.87 percent lower at $1,291.70 a troy ounce as of 08:45 GMT.

According to CNBC and Politico, US President Trump will meet with Fed Chairwoman Yellen on Thursday to offer a second term ahead of the world’s most important central bank.

Other White House favourite candidates for the job include Stanford Economist John Taylor, who is believed to be more hawkish than Yellen, and FOMC Jerome Powell and former Fed governor Kevin Warsh.

Yellen’s contract ends in February. She was assigned back in 2014 as the first woman leader by former President Barack Obama.

According to Fed funds tracked by CME Group’s FedWatch program, investors are pricing in a 91.7 percent chance of a 25 basis points interest rate hike by December.

The precious metal jumped to its highest level since September 26 at $1,308.40 in the previous session, as safe-haven demand increased on the back of an armed conflict between Iraqi and Kurdish forces near the oil-rich city of Kirkuk. Iraqi forces took control of part of the territory.

The US dollar index, which gauges the greenback against a basket of six major currencies, was trading 0.14 percent higher by the time of this writing at 93.30.

Gold, a dollar-denominated commodity, goes under pressure when the greenback becomes stronger across the board as it makes the metal more expensive, less appealing.

Ahead in today’s session, traders will be paying attention to the UK consumer price index and producer price index input for September, Germany’s ZEW economic sentiment, Eurozone’s latest inflation data and speeches from BoE Governor Mark Carney and ECB Executive Praet.

In the United States, focus will be at export and import price indexes, industrial production figures for September and the federal budget balance.

What’s next? – OIL 17.10.17

Oil futures were little changed in early trading hours on Tuesday, as investors took a breather following a rally to the highest levels in nearly three weeks in the light of rising concerns due to a conflict between Iraqi troops and Kurdish forces near the oil-rich city of Kirkuk.

The confrontation takes place after last month’s Kurdish referendum in which people voted in favor of independence. The referendum rose tensions with Baghdad, Washington and Turkey.

The US West Texas Intermediate crude contracts were 0.48 percent up at $52.12 a barrel by 08:45 GMT. Elsewhere, Brent crude futures added 0.48 percent at $58.10.

Market participants are looking ahead to weekly inventory data from the United States on crude and refined products to measure the strength of demand in the world’s top oil consumer.

The American Petroleum Institute will release its estimates as of 20:30 GMT on Tuesday. Last week data showed a 3.1 million barrels increase in crude stockpiles.

The Energy Information Administration will present official figures on Wednesday as of 14:30 GMT, with a 4.7 million barrels decline seen for the week ended October 13.

Last week, crude benchmarks were supported by higher expectations for an extension of OPEC’s production cuts deal beyond its March 2018 deadline.

The deal was originally signed in November 2016 and has been extended for nine months in May, although the volume of reductions remains at 1.8 million barrels per day.

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