What’s next? – GOLD, OIL 17.04.18

GOLD

Gold prices were lower in Asian hours on Tuesday, with market participants moving its focus to fresh economic reports later in the session while keeping an eye on politics.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.24 percent at $1.347.40 a troy ounce as of 06:50 GMT.

The yellow metal struggled for direction on Monday despite higher geopolitical tension between the United States and Russia following a US-led air strike over Syria.

On Saturday, France, Britain and the US conducted a multi-target air strike against key military facilities in Syria in response to a gas attack by President Bashar al-Assad on civilians.

While the US and Russia hold different positions in this matter, there hasn’t been any direct provocations in the days following the air strike. Investors interpreted that as a sign of release, which is not good for safe-haven assets such as the precious metal.

In other news, US President Donald Trump accused China and Russia of playing a “currency devaluation game,” calling it unacceptable as the Federal Reserve continues to raise rates.

Trump tweeted on Monday: "Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!"

The US dollar index, which gauges the greenback against six major currencies, was trading 0.01 percent lower at 89.13 by the time of this writing.

Dollar-denominated gold is very sensitive to moves in the American currency. A weaker dollar makes the yellow metal more attractive for market players holding foreign currencies.

Another topic weighing on the agenda is sanctions against Russia, which according to White House press secretary Sarah Huckabee Sanders will be decided in the “near future”.

Investors sensed no rush in the administration to impose a fresh batch of sanctions, in contrast to remarks by the Ambassador to the United Nations Nikki Haley.

On the data front, retail sales for March came in line with analysts’ forecast of a 0.2 percent growth rate. Retail sales were above expectations with a 0.6 percent rise.

Ahead in the day, building permits and housing starts for March are due for release as of 12:30 GMT, while industrial production figures will be out at 13:15 GMT.

Investors will also keep an eye on FOMC speakers, including Williams (13:15 GMT), Quarles (14:00 GMT), Harker (15:00 GMT) and Bostic (21:40 GMT).



OIL

Oil futures were higher in early trading hours on Tuesday, with market players anxious to get a fresh look at crude inventory data in the United States.

The US West Texas Intermediate crude contracts were up 0.44 percent to $66.51 per barrel as of 06:50 GMT. Meanwhile, Brent futures rose 0.32 percent to $71.65 a barrel.

On Monday, crude benchmarks gave up gains, moving away from more than three-year highs as geopolitical tensions eased, while concerns over a larger US oil production remained intact.

Despite the fact that the US and Russia hold different positions over Syria - Middle East’s hot topic now - there hasn’t been any direct provocations in the days following the US-led air strike.

Market participants interpreted the calm as a sign of release, which is clearly not good for oil prices as investors speculated on conflict-related output disruptions.

Meanwhile, investors continued to fear about a potential rise in US shale oil production in the following months. Last week, Baker Hughes’ oil rig count rose by seven in the week ended April 13, bringing the total count at 815 units, the highest mark since March 2015.

According to CFTC COT data, money managers enlarged their net long positions in oil to 707,100 lots for the week ended April 10.

Ahead in the day, traders will count on the latest crude and refined products inventory estimates by the American Petroleum Institute as of 20:30 GMT.

FortFS