What’s next? – GOLD, OIL 23.04.18

GOLD

Gold futures were down on Monday as geopolitics remained calm and investors attention turned to fresh economic reports scheduled later this week.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.13 percent at $1.336.50 a troy ounce as of 06:25 GMT.

The yellow metal settled in red territory on Friday for the first time in two week, down 0.71 percent at $1,337.50 per troy ounce. Gold prices were extremely sensitive to the dollar, which continued to strengthen on the back of easing geopolitical tensions.

The US dollar index, which gauges the greenback against six major currencies, was trading 0.05 percent higher at 90.13 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.

No major news came out regarding the Syria conflict and political tension between the United States and Russia. Last week, a US-led coalition bombed at least six Syrian military facilities in response to a gas attack conducted by the local government against civils.

The lack of developments over the US-China commercial dispute also contributed to a better market sentiment, boosting demand for risky assets.

Meanwhile, investors also weighed a more aggressive rhetoric by representatives of the Federal Open Market Committee on interest rates adjustments and monetary policy changes.

Cleveland Fed President Loretta Mester said Thursday that “if the economy evolves as I anticipate, further gradual increases in interest rates will be appropriate this year and next year”.

Ahead in the day, traders will keep an eye on the US manufacturing and services PMIs for April due for release as of 13:45 GMT. Existing home sales for March are up 14:00 GMT.

OIL

Oil futures were mixed in early trading hours on Monday as profit taking capped gains and as traders looked ahead to upcoming inventory reports later this week.

The US West Texas Intermediate crude contracts were down 0.10 percent to $68.33 per barrel as of 06:45 GMT. Meanwhile, Brent futures were unchanged at $74.06 a barrel.

Oil benchmarks settled moderately higher on Friday, as President Donald Trump blamed the Organization of the Petroleum Exporting Countries (OPEC) for high prices.

“Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!” tweeted Trump.

OPEC and non-OPEC members gather in Saudi Arabia on Friday as part of their monitoring routine over output cuts meant to run until the end of 2018. The cuts agreed between OPEC and 10 external producers contemplate a reduction of 1.8 million barrels per day.

In June, the oil cartel and other nations taking part in the deal will meet to discuss a potential extension of the agreement. Saudi Arabia said a renewal is still on the table.

In other news, Baker Hughes said the total oil rig count for the United States increased by five units, bringing the count up to 820 rigs in April 20, the highest level since March 2015.

According to latest figures of the Energy Information Administration, 10.54 million barrels per day were producers in the United States last week, an all-time high that puts the country close to major producers such as Saudi Arabia and Russia.

In the week ahead, market players will likely be monitoring geopolitics, especially in the Middle East. Also, fresh inventory data is due to be published on Wednesday.

FortFS