What’s next? – GOLD, OIL 22.03.18

GOLD

Gold prices were higher in Asian hours on Thursday, with investors trying to weigh the results of the latest monetary encounter in the US while keeping an eye on the dollar’s dynamic.

On the Comex division of the New York Mercantile Exchange, gold futures were up 0.66 percent at $1.330.20 a troy ounce as of 04:50 GMT.

The yellow metal added to a nearly a one-week high as dollar edged lower despite the US central bank raised its benchmark rate by 25 basis points and reinforced the idea of further monetary policy adjustments for the near future.

The US Federal Reserve rose interest rates to a range between 1.50 and 1.75 percent. The move was widely anticipated and therefore little reaction was seen following the announcement.

Analysts had previously warned that this monetary meeting was likely turn into a buy-the-rumor-sell-the-fact event. Investors opted to take profits after the rate hike, pushing the American currency to the downside by the end of the session.

This monetary policy meeting has been the first one with Jerome Powell as Chair of the Federal Reserve. Overall, he remained on a hawkish side, insisting that the economy won’t overheat.

Among different topics mentioned during his remarks, the Fed chief recognized that "a number of participants in the [FOMC] did bring up the issue of [Donald Trump’s import] tariffs"

Investment bank Wells Fargo said it forecasts for four interest rate hikes in 2018 remains in place, as they see inflation picking up in the next few months and strong labor conditions.

“Financial market and geopolitical uncertainties could keep gold at relatively high levels despite the strong economic growth that should favor interest rate hikes,” Desjardins Group said.

On the data front, existing home sales for February came in at a 5.54 million rate, displaying a better-than-expected increase of 3.0 percent against a forecasted 0.5 percent.

Ahead in the day, traders will keep an eye on initial jobless claims at 12:30 GMT and preliminary readings on the manufacturing and services PMIs for March at 13:45 GMT.

OIL

Oil prices were higher in Asian trading hours on Thursday, with participants digesting unexpected inventory moves and looking ahead to the weekly rig count in the US.

The US West Texas Intermediate crude contracts were up 0.09 percent to $65.23 per barrel as of 04:50 GMT. Meanwhile, Brent futures rose 0.03 percent to $69.49 a barrel.

Crude benchmarks settled higher on Wednesday, near six-week highs, as US inventories dropped unexpectedly in the previous week.

The US Energy Information Administration said that crude supplies for the week ended March 16 fell by 2.6 million barrels against a forecast gain of 2.6 million barrels.

Earlier this week, the American Petroleum Institute said crude inventories were likely to decline by 2.7 million barrels, a figure that turns out to be pretty close to official numbers.

The total inventories for crude in the United States stood at 428.3 million barrels last week. US crude oil production remained above 10 million barrels per day, close to Saudi Arabia and Russia, the world leading crude producers.

While investors are feeling a bit more released these last few days over the oil supply matter, concerns that US production will derail OPEC-led efforts continues to weight on sentiment.

This week’s EIA report also showed that gasoline stockpiles notched down by 1.7 million barrels, compared to an estimated decline of around 2.0 million barrels.

Ahead this week, Baker Hughes’ weekly oil rig count is up on Friday.

FortFS