What’s next? – GOLD, OIL 23.02.18

GOLD

Gold prices extended their losses on Friday early trading hours as the dollar continued to strengthen against its rivals despite some dovish FOMC remarks.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.29 percent at $1.328.80 a troy ounce as of 07:30 GMT.

The US dollar index, which measures the greenback against six major currencies, was trading 0.25 percent higher at 90.14 by the time of this writing.

The dollar-denominated metal is sensitive to changes in the US currency. A stronger greenback makes the metal more expensive, less attractive for holders of foreign currencies.

On Thursday, St Louis Fed President James Bullard said increasing interest rates too many times this year could have a negative effect on economic growth.

New York Fed President William Dudley also spoke in the previous session, but did not comment on monetary policy issues. Instead, the policymaker, whose district includes Puerto Rico, said the island should take this difficult moment to rebuild its infrastructure. On September 20, 2017, Puerto Rico was affected by the worst storm in 90 years.

Not many relevant releases were published on Thursday. Initial jobless claims were the main focus. They came in at 222,000 against 230,000 estimated and a prior 229,000.

Ahead in the day, no macroeconomic reports are due for release, so attention will rather shift to speeches from FOMC members Dudley and Rosengren at 15:15 GMT, Mester at 18:30 GMT and Williams at 20:40 GMT.

According to Fed funds tracked by CME Group’s FedWatch program, market participants are currently weighing an 85 percent probability of a 25 basis-point rate hike by March.

OIL

Oil prices were higher on Friday, with market players cheered by an unexpected drop in US crude inventories despite the dollar extended gains against rivals.

The US West Texas Intermediate crude contracts were down 0.05 percent to $62.74 per barrel as of 08:00 GMT. Meanwhile, Brent futures eased 0.03 percent to $66.37 a barrel.

Crude benchmarks are denominated in US dollars. A stronger greenback makes contracts more expensive for investors holding foreign currencies, dampening interest on the commodity.

The US dollar index, which measures the greenback against six major currencies, was trading 0.25 percent higher at 90.14 by the time of this writing.

The Energy Information Administration said crude stockpiles fell by 1.6 million barrels for the week ended Friday 16. Analysts had forecasted a 1.8 million-barrel build.

In other news, American crude exports rose by more than 2 million barrels per day. According to market experts, the US could get ahead of Russian in crude output by late 2018.

At the time, the largest crude terminal in the United States is the Louisiana Offshore Oil Port. The upward move is also supported by a health growth of physical demand in Asia.

Market analysts are expecting US producers to increase their production in the near term, especially after Baker Hughes’ oil rig count showed last week an uptick of 51 rigs to 798.

Ahead in the session, a weekly look at the oil rig count will be published at 18:00 GMT.

FortFS