What’s next? – GOLD, OIL 05.04.18

GOLD

Gold prices were lower in Asian hours on Thursday, with trade war worries remaining on the spotlight as market players move back and forward from safe-haven assets.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.58 percent at $1.332.40 a troy ounce as of 07:15 GMT.

Gold ended the previous session higher around $1,352.30 per troy ounce as trade war concerns between the United States and China continued to settled the tone in markets.

Analysts have pointed out that the decision to extend the initial 30-day consultation period up to 60 days could indicate that the “US side has already left room for negotiation.”

In parallel, China announced additional tariffs on 106 US products.

On Wednesday, US President Donald Trump wrote on Twitter: “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!”

The Trump administration offered further details on Tuesday over the $50 billion of Chinese goods that could be subject to 25 percent tariffs.

In other news, St. Louis Fed President James Bullard said Wednesday “it is not necessary in this circumstance to raise the policy rate further in order to put downward pressure on inflation, since inflation is already below target”

The US dollar index, which measures the greenback against six major currencies, was trading 0.10 percent higher at 89.88 by the time of this writing.

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OIL

Oil prices were trading higher in early hours on Thursday, with market participants digesting a remarkable drop in US crude inventories last week while waiting for the latest rig count.

The US West Texas Intermediate crude contracts were up 0.38 percent to $63.61 per barrel as of 07:15 GMT. Meanwhile, Brent futures rose 0.43 percent to $68.31 a barrel.

On Wednesday, crude benchmarks traded mainly lower but ended on a higher note after the US Energy Information Administration released the latest crude inventory.

According to the government, crude stockpiles dropped 4.617 million barrels for the week ended March 30, against expectations for a 1.4 million barrels increase.

The draw in crude inventories was a result of higher refinery activity which tends to increase demand of “black gold”. The EIA said refinery activity rose 0.07 percent.

Gasoline inventories notched down by 1.116 million barrels, below an estimated decline of 1.264 million barrels, while supplies of distillate fell 537,000 barrels, also missing expectations for a 1.134 million barrels reduction.

“For the first time since 1979, distillate demand during the month of January reached 4.394 million barrels, up about 16% year-on-year and 9% higher than the seasonal 5-year average,” global investment banking firm Jefferies said.

Ahead, investors await Baker Hughes’ US oil rig count on Friday.

FortFS