What’s next? – GOLD, OIL 29.03.18

GOLD

Gold prices were lower in Asian hours on Thursday, with fresh economic data in the US and the EU eyed.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.18 percent at $1.328.60 a troy ounce as of 06:50 GMT.

The yellow metal ended Wednesday’s session with a sharp decline as market players moved away from gold amid an strengthening US dollar.

Overnight, the US dollar index added more than 0.80 percent to trade around 89.71, a five-day peak, with upbeat economic data offering support, as well as an improving market sentiment.

The US Commerce Department said the gross domestic product (GDP) rose to an annual growth rate of 2.9 percent, above a prior revision of 2.5 percent and a 2.7 percent rate seen.

The US dollar index, which measures the greenback against six major currencies, was trading 0.01 percent lower at 89.61 by the time of this writing.

Also contributing to the downturn of gold were reports indicating that North Korean leader Kim Jong Un pledged to denuclearize the Korean peninsula. Xinhua news agency said an unofficial meeting between President Xi Jinping and Kim took place in Beijing.

President Donald Trump, who is expected to meet Kim in the near future, recognized that positive steps are being taken in order to guarantee a full denuclearization of the region.

“Received message last night from Xi Jinping of China that his meeting with Kim Jong Un went very well and that Kim looks forward to his meeting with me,” Trump tweeted.

On the data front, Fed’s favorite inflation measure - the core PCE price index - is scheduled for release at 12:30 GMT. Data will come along with personal spending for February. Michigan University will release consumer expectations and sentiment surveys for March at 14:00 GMT.

OIL

Oil prices were mixed on Thursday midday trading hours, with market participants weighing a rise in US crude inventories and production, while speculation about a potential extension of OPEC-led output cuts in 2019 provided support.

The US West Texas Intermediate crude contracts were up 0.12 percent to $64.46 per barrel as of 12:10 GMT. Meanwhile, Brent futures dropped 1.64 percent to $68.37 a barrel.

The US Energy Information Administration said Wednesday that crude supplies increased by 1.6 million barrels in the last week to 429.95 million barrels. Analysts had estimated a 0.2 million barrels reduction for the previous week.

The report also showed a build in crude production to an all-time high of 10.43 million barrels per day last week, which places the US above OPEC’s de-facto leader Saudi Arabia.

Crude benchmarks have faced increasing pressure in the last few months on expectations that higher US oil production could derail OPEC and Russia’s efforts to rebalance the market.

Earlier this week, the American Petroleum Institute estimated an increase in crude stockpiles by 5.3 million barrels for the week ended March 23. API and EIA data often differ.

Ahead in today’s session, investors await Baker Hughes’ weekly oil rig count as of 17:00 GMT. The report will be published a day earlier than the usual as tomorrow markets will be closed in observance of Good Friday Holiday.

FortFS