What’s next? – GOLD, OIL 13.02.18

GOLD

Gold futures were higher in early trading hours on Tuesday, with market players holding from strong movements as the economic front continues to be very light.

On the Comex division of the New York Mercantile Exchange, gold futures were up 0.18 percent at $1.328.80 a troy ounce as of 06:00 GMT.

Bullion prices settled higher on Monday, as the dollar extended its correction downwards and market participants looked ahead of the Lunar New Year in China and other Asian nations later this week, expected to boost physical demand for the metal.

According to the World Gold Council, nearly half of today’s total demand for the yellow metal is used for jewellery, with China and India leading charts on consumption.

The American currency came under pressure on Monday amid an empty economic calendar and as investors await fresh data to provide a more clear direction.

The US dollar index, which measures the greenback against six major currencies, was trading 0.29 percent lower at 89.84 by the time of this writing.

The dollar-denominated metal is sensitive to changes in the US currency. A weaker greenback makes the metal more attractive for investors holding foreign currencies.

On Monday, Credit Suisse said it expects the Federal Reserve to hike interest rates four times this year. The US regulator has forecasted at least three rate adjustments.

At the time, benchmark rates remain in a range between 1.25 percent and 1.50 percent.

Ahead in the day, no relevant data is expected in the US. Attention will be directed to the UK Consumer Price Index and Price Producer Index Input for January at 09:30 GMT.

OIL

Crude oil prices were higher in early Asia on Tuesday as market participants waited for fresh inventories for crude in the US later in the day.

The US West Texas Intermediate crude contracts were up 0.54 percent to $59.61 per barrel as of 06:00 GMT. Meanwhile, Brent futures added 0.56 percent to $62.94 a barrel.

Crude benchmarks settled higher after OPEC’s monthly report showed a stronger global oil demand, contributing to a better investor sentiment.

The Organization of the Petroleum Exporting Countries said global oil demand is expected to increase by 1.59 million barrels per day, up by 60K bpd from December’s estimation.

However, the organization also said non-OPEC production is likely to rise to 59.26 million bpd in 2018, which is 320,000 bpd higher than its prior forecast.

The United States has taken nearly half of the non-OPEC output upward revision, as recent data showed production broke above 10 million barrels per day.

Oilfield services provider Baker Hughes said the oil rig count added 26 to 791 last week. The move boosted speculation that producers will produce more to take advantage of higher prices.

“Shale is coming and the expectation is that it will come stronger than in 2017, and this is something that we have to watch, [...] But considering all factors, I don’t think it will be a huge distorter of the market,” said United Arab Emirates Energy Minister Suhail Al Mazrouei

Ahead in today’s session, traders will wait for crude and refined products inventories estimates by the American Petroleum Institute as of 21:35 GMT.

Fort Financial Services