What’s next? – GOLD, OIL 09.11.17

GOLD

Gold futures were trading higher on Thursday as market participants looked ahead to fresh economic data later in the day while monitoring the dollar dynamics for direction.

On the Comex division of the New York Mercantile Exchange, gold futures were higher 0.05 percent to $1.284.40 a troy ounce as of 07:05 GMT.

The yellow metal ended in green territory on Wednesday near a three-week high as worries concerning President Trump’s tax reform weighed on the American currency.

The US dollar index, which gauges the greenback against six major rivals, was trading at 94.64, down 0.14 percent by the time of this writing.

On Tuesday, the GOP Senate began to revise the administration’s tax plan, which intends to reduce the corporate tax rate from 35 percent to 20 percent, as well as simplify the current seven-brackets system to only three categories of individual taxpayers.

But reports yesterday pointed out at a potential one-year delay on the matter, boosting demand for safe-haven assets as speculation for lower taxes continues to cheer Wall Street.

Gold is a dollar-based commodity becomes less expensive when the dollar falls under pressure, making the metal more competitive for investors holding foreign currency.

According to the the Commodity Futures Trading Commission, net long positions on gold increased to 193,100 from 191,400 in the previous week. However, analysts believe this upward move could soon be reverted and the downward trend reactivated.

No relevant data was released on Wednesday. Ahead, players will be focusing on the release of German trade balance figures for September as of 07:00 GMT, with 21.1 billion euro eyed.

The European Central Bank will present its latest economic bulletin as of 09:00 GMT. An hour later, EU’s economic forecast will be out. US initial jobless claims are set at 13:30 GMT.

OIL

Oil futures were slightly higher in Asian trade on Thursday as market participants continued to digest downbeat inventory data from the United States and awaited the weekly oil rig count.

The US West Texas Intermediate crude contracts were up 0.04 percent to $56.83 per barrel as of 07:05 GMT. Brent futures were up 0.08 percent, to $63.54 a barrel.

Crude benchmarks settled in red territory on Wednesday after the US Energy Information Administration said inventories rose in the week ended November 3.

The agency also reported that production levels in the world’s first economy moved to all-time highs last week. Data helped to dispel expectations for lower production in the near future, an idea supported by the continuous decline seen at Baker Hughes’ oil rig count.

Preliminary production in the US grew 0.7 percent to an historic peak of 9.62 million barrels per day last week, the EIA said. This is the highest level since 2005.

Crude stockpiles rose 2.2 million barrels, against expectations for a 2.8 million barrels drop. Gasoline inventories notched down by 3.3 million barrels, outperforming an initially estimated 1.9 million barrels. Distillate supplies were also down by 3.4 million barrels.

Earlier, China said its oil imports dropped to 7.3 million barrels per day in October from nearly 9 million barrels per day in the prior month.

Ahead in the week, attention will be directed to Baker Hughes’ weekly oil rig count on Friday.

Fort Financial Services