What’s next? – GOLD, OIL 06.03.18

GOLD

Gold prices were up in Asian trading hours on Tuesday, with market participants closely monitoring the US political side, while the dollar dynamic is again setting the tone.

On the Comex division of the New York Mercantile Exchange, gold futures rose 0.33 percent at $1.324.20 a troy ounce as of 05:05 GMT.

The yellow metal dropped by the end of Monday as speculation over a trade war eased as President Donald Trump seemed open to lifting import tariffs on steel and aluminium if a “new and fair,” North American Free Trade Agreement (NAFTA) gets signed.

Trump wrote on Twitter: “Tariffs on Steel and Aluminum will only be lifted if new and fair North American Free Trade Agreement (NAFTA) is signed.”

In other news, House Speaker Paul Ryan reportedly showed concern about the plan of Donald Trump, outlining that it could be devastating for the economy and jeopardize recent economic gains collected from the Republican-backed tax reform.

The US dollar index, which measures the greenback against six major currencies, was trading 0.12 percent lower at 89.94 by the time of this writing.

A stronger greenback has a negative impact on the metal. As the dollar gains strength, the metal becomes more expensive for holders of foreign currencies, which weighs on its demand.

Ahead in the session, traders will keep an eye on factory orders for January, which are scheduled for release at 15:00 GMT.

OIL

Oil benchmarks were up in early trading hours on Tuesday, with market participants looking ahead to fresh inventory data later in the day.

The US West Texas Intermediate crude contracts were up 0.18 percent to $62.68 per barrel as of 05:05 GMT. Meanwhile, Brent futures added 0.17 percent to $65.65 a barrel.

Crude benchmarks moved sharply higher on Monday following a report that showed further reductions in crude supplies at the cushing storage hub in Oklahoma, which evidences solid economic growth accompanying oil demand.

Market analysts have noted stockpiles at the key US hub are likely to continue to fall as shale oil producer are inclined to sell rather than store as prices remain attractive.

In other news, the International Energy Agency warned that US shale production is expected to rise in the next five years, adding to market disbalance concerns.

“The United States is set to put its stamp on global oil markets for the next five years,” IEA’s executive director Fatih Birol said in a statement.

Last week, oilfield services company Baker Hughes said the weekly oil rig count increased by one to 800, the highest point in the last three years.

Ahead in the session, the American Petroleum Institute will release its crude and refined products stockpiles estimates for the week ended March 2.

FortFS