What’s next? – GOLD, OIL 09.04.18

GOLD

Gold prices were lower in early trading hours on Monday as the dollar extended gains across the board on the back of easing tensions between the United States and North Korea, despite the US-China commercial dispute continues to weigh on sentiment.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.04 percent at $1.335.60 a troy ounce as of 06:35 GMT.

The White House confirmed that North Korean de-facto leader Kim Jong-un is ready to discuss denuclearisation in the Korean peninsula with President Trump. A meeting between both leaders would be soften geopolitical tensions that have been recently affecting risk appetite.

The US dollar index, which measures the greenback against six major currencies, was trading 0.02 percent lower at 90.14 by the time of this writing.

Dollar-denominated commodities such as gold are sensitive to fluctuations in the dollar. A stronger greenback makes gold more expensive for investors holding foreign currencies, which tends to reduce demand for the yellow metal.

No economic data is scheduled in US hours. Ahead this week, market participants will be looking ahead to inflation data, including the PPI on Tuesday and the CPI on Wednesday.

OIL

Crude oil prices recovered in Asian hours on Monday following a draw seene last Friday amid increasing fears of an intensifying trade war between China and the United States.

The US West Texas Intermediate crude contracts were up 0.37 percent to $62.29 per barrel as of 07:15 GMT. Meanwhile, Brent futures fell 0.42 percent to $67.39 a barrel.

Investors are increasingly worried about a potential trade war between the world’s two biggest economies. Last week, President Donald Trump asked US officials to work on a set of additional tariffs for about $100 billion worth in Chinese products.

China did not take long to respond. Beijing announced 128 US products were added to the list that could potentially face a 25 percent increase in tariffs.

Thursday and Friday were days off in China. Stock markets were closed. Shanghai Crude WTI Futures fell in early hours on Monday to about 400.00 yuan or $63.40 per barrel by 03:00 GMT.

Investors are particularly worried about rumors saying that China could impose tariffs on US oil, which would elevate costs and open the doors to other competitors like Russia.

In other news, China has moved forward with its plan to pay for oil in yuan rather than US dollars. That gives the Asian super power a huge benchmark to control pricing of the commodity distributed in Asia. China is the world’s largest energy consumer.

Last week, Baker Hughes said 11 rigs were added in the week ended April 6, leaving the total oil rig count at 808 platforms. This indicates more production is about to comer.

FortFS