What’s next? – GOLD, OIL 10.04.18

GOLD

Gold prices dropped on Tuesday as the dollar edged higher following an overnight tumble amid reports of FBI breaking into the office of US President Donald Trump’s lawyer.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.34 percent at $1.335.50 a troy ounce as of 06:50 GMT.

Dollar-denominated gold is very sensitive to moves in the American currency. A stronger dollar makes the precious metal more expensive for investors holding foreign currencies.

The US dollar index, which gauges the greenback against six major currencies, was trading 0.10 percent higher at 89.62 by the time of this writing.

The economic front on Monday was empty. Ahead in today’s session, traders will be looking at the producer price index for March, which is expected to show a 0.1 percent growth.

Earlier today, Chinese President Xi Jinping announced a series of measures included in a plan designed to further open and promote integration in the economy.

"We encourage normal technological exchanges and cooperation between Chinese and foreign enterprises and protect the lawful [intellectual property] owned by foreign enterprises in China," Xi said speaking at the Boao Forum for Asia.

His comments were positively welcomed by market participants who have seen these as a new prove of China’s readiness to solve commercial differences with the United States.

OIL

Oil prices extended gains on Tuesday early trading on expectations that trade differences between China and the US would be soon resolved without harming the global economy.

The US West Texas Intermediate crude contracts were up 0.65 percent to $63.83 per barrel as of 07:00 GMT. Meanwhile, Brent futures fell 0.55 percent to $69.03 a barrel.

Concerns over a potential trade war between the world’s two biggest economies have been weighing on market sentiment and increasing uncertainty about the future of crude demand.

While the Trump administration continues to threaten with new tariffs on Chinese products worth $100 billion, China added 106 US products that could face a 25% percent increase in tariffs.

Sentiment began to improve during the weekend, when President Trump tweeted: "President Xi and I will always be friends, no matter what happens with our dispute on trade. China will take down its Trade Barriers because it is the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectual Property. Great future for both countries!"

Investors are also keeping an eye on changes inside the Trump administration. Officials being quickly replaced with harder pro-Trump visions could generate further sanctions against oil producers such as Iran, Venezuela and Russia.

The latest oil rig count by Baker Hughes said 11 rigs were added in the week ended April 6, leaving the total oil rig count at 808 platforms.

Ahead in the session, trades await crude and refined products stockpiles estimates by the American Petroleum Institute as of 20:30 GMT.

FortFS