What’s next? – GOLD, OIL 13.04.18

GOLD

Gold prices traded higher in Asian hours on Friday, with rising geopolitical tension over Syria offering support to the demand of safe-haven assets.

On the Comex division of the New York Mercantile Exchange, gold futures were up 0.07 percent at $1.342.90 a troy ounce as of 06:20 GMT.

On Thursday, US President Donald Trump said military actions in Syria “could be very soon or not so soon at all”. His remarks boosted the dollar’s position and weighed on the metal.

The precious metal fell 1.3 percent in the previous session, the largest one-day drop since March 28. The dollar’s dynamic continues to play a key role for gold prices.

The US dollar index, which gauges the greenback against six major currencies, was trading 0.08 percent higher at 89.33 by the time of this writing.

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

Ahead in today’s session, traders will be paying attention to speeches by FOMC members Rosengren and Bullard as of 12:00 GMT and 13:00 GMT respectively.

On the data front, JOLTs job openings for February will be published at 14:00 GMT, along with Michigan Consumer Expectations and Sentiment indicators for April.

OIL

Oil prices were trading lower in early hours on Friday, with market players awaiting a fresh look at Baker Hughes’ US oil rig count later in the day, while keeping an eye in Middle East tensions.

The US West Texas Intermediate crude contracts were up 0.13 percent to $66.98 per barrel as of 06:45 GMT. Meanwhile, Brent futures rose 0.11 percent to $71.94 a barrel.

Crude benchmarks settled Thursday near three-year highs amid higher expectations that geopolitical tensions in the Middle East would create oil production disruptions in the near term.

On Thursday, US President Donald Trump said an attack in Syria may not be necessary, although he insisted all alternatives are still on the table.

“[Military actions] could be very soon or not so soon at all,” said Trump. His remarks supported the US dollar, which is seen as negative factor for dollar-denominated commodities.

However, oil traders were mainly focused in the Middle East rather than the dollar. Another issue weighed by investors is potential sanctions against Iran by the United States over the nuclear deal. The recent change of Secretary of States reduced any hopes for continuing support of it.

"In our view the intensification of these proxy fights further dims any hope of the White House remaining in the Iranian nuclear deal when the sanctions waivers once again come up for renewal," Royal Bank of Canada said in a note.

Also contributing higher oil prices was OPEC’s monthly report. The Organization of the Petroleum Exporting Countries said total output dropped to the lowest since March 2017.

According to the report, OPEC’s production eased 201,400 barrels a day last month to 31.96 million barrels a day, thanks to stronger cuts in Venezuela, Saudi Arabia and Libya.

Ahead in today’s session, Baker Hughes’ oil rig count is scheduled at 17:00 GMT.

FortFS