What’s next? – GOLD, OIL 14.11.17

GOLD

Gold prices were slightly lower in Asian hours on Tuesday despite market players awaited a batch of key economic data ahead in the day.

On the Comex division of the New York Mercantile Exchange, gold futures were lower 0.05 percent to $1.278.20 a troy ounce as of 01:10 GMT.

The yellow metal ended in green territory on Monday as uncertainty continued to push market participants into safe-havens such as gold. However, the falling pound supported the dollar, which limited gains for the precious metal.

The House of Representatives is going to vote later this week on Trump’s tax reform bill, but there is plenty of uncertainty over the new regulation. The House’s tax-writing committee has recently said that it will now allow an elimination of a federal deduction for state and local taxes.

This situation is currently weighing on the US dollar as speculation over tax reductions for individuals and corporations has played a big role in this year’s Wall Street rally.

Investors understand lower taxes for individuals and corporations could boost economic growth, pushing the Federal Reserve to hike interest rates at a faster pace to cope with higher inflation.

The US dollar index, which gauges the greenback against six major rivals, was trading at 94.40, up 0.01 percent by the time of this writing.

But uncertainty was not only concentrated in the United States. In the United Kingdom, reports said the Conservative Party agreed to sign a letter of no-confidence in PM Theresa May. Members of the party doubt about her ability to run the nation into a successful Brexit.

Ahead in the day, traders will be paying attention to comments from central bank leaders at 10:00 GMT, including ECB President Mario Draghi, Fed Chairwoman Janet Yellen, Bank of England Gov Mark Carney and Bank of Japan Gov Haruhiko Kuroda.

On the data front, Germany’s consumer price index (F: 0.0%) for October and third-quarter gross domestic product (F: 0.6% m/m) are due for release as of 07:00 GMT. At 09:30 GMT, the UK will presents its consumer (F: 0.2%) and producer price (F: 1.1%) indexes for October.

Also in Germany, ZEW economic conditions and sentiment indicators will be out at 10:00 GMT. The Eurozone will release a preliminary reading of its third-quarter GDP by that time too, as well as industrial production figures for September.

In the United States, the producer price index will be available at 13:30 GMT, with a 0.1 percent build seen for October and a 0.2 percent growth rate for the core index.

OIL

Oil futures were moderately lower in Asian hours on Tuesday as players prepared for a first look at last week’s US inventories and kept an eye on IEA’s report.

The US West Texas Intermediate crude contracts were up 0.12 percent to $56.69 per barrel as of 01:10 GMT. Brent futures were up 0.05 percent, to $63.13 a barrel.

Crude benchmarks settled in green territory on Monday, with market players expected geopolitical instability in the Middle East will widen supply disruptions from key producers in the region. However, oil gains were capped by expectations for higher US shale oil production.

Both contracts remained inside a narrow range in the previous session, with the WTI contracts rising up to $56.76 a barrel while the London-based Brent traded at $63.20 per barrel.

Over the week, tension in the Middle East reached a new high following an explosion on a very important Saudi-Bahrain oil pipeline. All fingers pointed at Iran as the responsible for the attack.

Meanwhile, traders continued to process last week’s uptick in oil rigs. According to Oilfield services firm Baker Hughes, the number of rigs drilling for oil in the United States rose by nine to 738 units in the week ended November 10, breaking with a fifth consecutive weekly decline.

Eyes are also directed to the OPEC November 30 meeting in Vienna, where representatives from the oil cartel and an external group of producers led by Russia will gather to discuss a potential extension of the so-called output cuts agreement.

Ahead in the session, focus will be at two events. First, the International Energy Agency releases its monthly report at 09:00 GMT. Second, the American Petroleum Institute will publish its stockpiles estimates for crude and refined products for last week.

Fort Financial Services