What’s next? – GOLD, OIL 23.11.17

GOLD

Gold futures were lower in Asian hours on Thursday with traders looking ahead to further economic data later in the day, while US markets remain closed for Thanksgiving.

On the Comex division of the New York Mercantile Exchange, gold futures were lower 0.26 percent to $1.288.90 a troy ounce as of 05:35 GMT.

The yellow metal traded mostly higher on Wednesday as market participants awaited the release of Federal Reserve monetary meeting minutes and as flattening Treasury yields continued to weigh on sentiment.

Economist are concerned that yields of short term bonds will surpass yields of bonds with a longer maturity. This phenomenon is typically associated with pre-crisis times.

As it was widely expected, minutes from FOMC latest encounter brought no breaking news into the play. Monetary authorities continued to express support for the regulator’s normalization process.

"In their discussion of the economic situation and the outlook, meeting participants agreed that information received since the FOMC met in September indicated that the labor market had continued to strengthen and that economic activity had been rising at a solid rate despite hurricane-related disruptions," the minutes said.

According to Fed funds tracked by CME Group’s FedWatch tool, market participants are currently pricing in nearly a 100% probability of a rate hike by December.

Gold is very sensitive to changes in US benchmark rates. A higher rates environment tends to promote high-yielding assets, which is bad for the precious metal.

The American currency will be today a key factor to determine the dynamic of golf as Wall Street will remain close due to the Thanksgiving holiday.

The US dollar index, which measures the greenback against a basket of six major rivals, was trading at 93.13, 0.01 percent to the downside by the time of this writing.

On the data front, the US Commerce Department said non-defense core capital goods orders, dropped 0.8 percent last month.

OIL

Oil futures were trading lower in early trading hours on Thursday, as market participants digested upbeat inventory data from the US and awaited the weekly oil rig count.

The US West Texas Intermediate crude contracts were down 0.22 percent to $57.89 per barrel as of 05:40 GMT. Meanwhile, Brent futures eased 0.28 percent, to $63.14 a barrel.

Crude benchmarks settled in green territory on Wednesday as crude inventories declined for the first time in three weeks, according to official data from the Energy Department.

The US Energy Information Administration said crude reserves dropped 1.9 million barrels in the week ended November 18, more than an originally estimated 1.6 million-barrel drop.

As for gasoline supplies, EIA data exposed a 44,000 barrels increase which fell short from a forecasted 737,000 barrels build. Distillate products were up by 269,000 barrels against a predicted draw of 1.2 million barrels.

A day earlier, the American Petroleum Institute had reported a 6.356 million barrels decline in crude stockpiles, compared to a forecasted draw of 1.545 million barrels.

Oil prices were also supported by a disruption in a key crude pipeline that connects the United States and Canada. TransCanada said oil deliveries will be reduced by up to 85 percent. Last week, a 5,000-barrel spill was registered in South Dakota.

Market players also kept an eye on speculation over OPEC’s potential extension of its controversial output cuts agreement. Discussions will take place on November 30.

Fort Financial Services