What’s next? – GOLD, OIL 18.04.18

GOLD

Gold futures traded in red territory on Wednesday as the American currency was able to recover some positions on the back of solid housing and industrial production data.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.15 percent at $1.347.50 a troy ounce as of 08:05 GMT.

Government figures showed that housing starts rose 1.9 percent to 1.319 million units. Also, the Federal Reserve said industrial output increased 0.5 percent in March.

The US dollar index, which gauges the greenback against six major currencies, was trading 0.08 percent higher at 89.30 by the time of this writing.

Dollar-denominated gold is very sensitive to moves in the greenback. A stronger dollar makes the yellow metal more expensive for market players holding foreign currencies.

In other news, former CIA Director Mike Pompeo travelled to North Korea to meet with Kim Jong Un ahead of a scheduled meeting with President Donald Trump. That could be interpreted as a sign of release and improving relations, which dampens demand for safe-havens.

Hawkish remarks from Fed official John Williamson Tuesday reinforced possibilities of further rate adjustments this year, another factor weighing on the metal.

Overnight, China said it would impose deposits of up to 178.9 percent on American sorghum imports. As China’s decision is expected to be temporary, no hugh reaction was spotted.

Ahead in this session, attention will be mainly directed to the European economic calendar. The consumer price index in the United Kingdom will become available at 08:30 GMT, with analysts’ preview standing at a 2.8 percent growth rate. The producer price index input for March is also expected to be released by that time.

In the Eurozone, market players await the consumer price index as of 09:00 GMT, with a forecasted rate of 1.4 percent year-over-year.

Later on, in US hours, Fed’s beige book is due for release at 18:00 GMT.

OIL

Oil futures were higher in early trading hours on Wednesday, as market participants continued to weigh potential supply disruptions in the Middle East.

The US West Texas Intermediate crude contracts were up 0.75 percent to $67.02 per barrel as of 08:05 GMT. Meanwhile, Brent futures rose 0.73 percent to $72.10 a barrel.

The Syria conflict, renewed sanctions against Iran and Venezuela’s political and economic crisis have lifted expectations of disruptions in supply for the months to come.

The ongoing output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and Russia are still helping to support prices. The agreement is effective until the end of 2018 but members of the cartel are talking about a potential extension.

OPEC output is currently lower than expected in the light of strong problems in Venezuela, which is facing a political and economic turmoil of unmeasured magnitud.

In other news, the American Petroleum Institute said crude stockpiles dropped 1 million barrels last week to 28 million barrels. API and EIA data often differ.

Official figures by the Energy Department will be released at 14:30 GMT.

FortFS