What’s next? – GOLD, OIL 07.02.18

GOLD

Gold prices were up in Asian trading hours on Wednesday, supported by a softer dollar.

On the Comex division of the New York Mercantile Exchange, gold futures were up 0.35 percent at $1.334.20 a troy ounce as of 07:30 GMT.

Overnight, the yellow metal dropped to three-week lows as the American currency continued to rise despite downbeat economic data.

The dollar-denominated metal is sensitive to changes in the dollar. A stronger base currency makes the precious metal more expensive for investors and therefore, reduces its demand.

The US dollar index, which measures the greenback against six major currencies, was trading 0.10 percent lower at 89.37 by the time of this writing.

On Tuesday, the US Labor Department said the Job Openings and Labor Turnover Survey for December came in at 5.81 million, below an initially estimated 5.96 million.

In other news, the US trade deficit grew to $53.1 billion in December, adding $2.7 billion from November. The trade balance measures the gap between imports and exports.

Attention was also directed to remarks by St. Louis Federal Reserve President James Bullard on Tuesday. The policymaker said current strength in the labor market is not likely to notably impact inflation growth.

"I caution against interpreting good news from labor markets as translating directly into higher inflation," Bullard said. "The empirical relationship between these variables has broken down in recent years and may be close to zero."

Ahead in today’s session, no relevant economic data is scheduled, but investors will be monitoring two speeches by FOMC members Dudley and Williams at 13:30 GMT and 22:20 GMT respectively.

OIL

Oil prices were up in Asian hours on Wednesday as market participants digested a draw in crude stockpiles, while awaiting official data from the Energy Department later in the day.

The US West Texas Intermediate crude contracts were up 0.87 percent to $63.94 per barrel as of 07:30 GMT. Meanwhile, Brent futures rose 0.93 percent to $67.48 a barrel.

The American Petroleum Institute said Tuesday crude inventories dropped by a surprising 1.050 million barrels in the week ended February 2.

The report also showed a draw of 227,000 barrels in gasoline stockpiles and an increase of 4.552 million barrels in distillate products.

Analysts had forecasted a 3.189 million barrels build in crude, a 459,000 barrels jump in gasoline and a 1.419 million barrels draw for distillates.

API data came in anticipation of official figures by the US Energy Information Administration, which are due to be released as of 15:30 GMT on Wednesday.

Benchmarks were down in late trading hours on Tuesday as the dollar extended gains across the board and put commodity prices under pressure.

The US dollar index, which measures the greenback against six major currencies, was trading 0.10 percent lower at 89.37 by the time of this writing.

Also contributing to the downtrend were fears that the US production will continue to rise in the upcomings weeks, potentially breaking above 10 million barrels per day.

Fort Financial Services