What’s next? – GOLD, OIL 11.05.18

GOLD

Gold futures traded lower in Asian trading hours on Friday, as the dollar recovered a few positions following softer-than-expected inflation figures.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.24 percent at $1.319.10 a troy ounce as of 7:05 GMT.

The American currency came under pressure late on Thursday, as disappointed inflation data in the United States added worries about monetary normalization policies by the Federal Reserve.

The US consumer price index increased 0.2 percent in April, against a forecasted 0.3 percent growth rate. However, this result is expected to have little impact on expectation for further monetary adjustments by the Federal Reserve.

Fed funds tracked by CME Group’s FedWatch tool show that traders are weighing in a 100 percent chance of a rate hike in the June monetary policy meeting.

The US dollar index, which measures the greenback’s strength against a basket of six major competitors, was up 0.12 percent at 92.63 by the time of this writing.

Dollar-denominated gold is sensitive to moves in the dollar. A stronger base currency makes gold more expensive for holders of foreign currency, damping demand for safe-havens.

In other news, US President Donald Trump confirmed Thursday his meeting with North Korean leader Kim Jong Un will take place in Singapore on June 12.

Ahead in the session, the US export/import price indexes for April are expected at 12:30 GMT. Later on, the University of Michigan will present its consumer sentiment survey for May at 14:00 GMT. FOMC Bullard is scheduled to speak as of 16:30 GMT.

OIL

Oil futures remained near multi-year highs on Friday as prospects of US sanctions against Iran threatened to take the crude market deeper into undersupply.

The US West Texas Intermediate crude contracts fell 0.03 percent to $71.34 per barrel as of 07:20 GMT. Meanwhile, Brent futures were down 0.14 percent at $77.36 a barrel.

Iran is the third largest producer of the Organization of the Petroleum Exporting Countries (OPEC) and it contributes 4 percent of global oil supplies.

The muslim nation, which current exports 2.6 million barrels per day, could face a 1-million-barrels-per-day limit on its exports, sources related to the matter said.

Following the 2015 international nuclear deal, sanctions against Iran were lifted, allowing the country to recover its oil production and therefore, stabilize its economy.

According to market analysts, re-imposing sanctions against Iran could take oil prices back to a range between $90 and $100 per barrel in the next few months.

Such prices levels will be incredibly beneficial for oil-dependant nations, such as Saudi Arabia or Russia. The Trump administration has 180 days to define how to proceed.

Earlier this week, President Donald Trump pulled the US out of the nuclear agreement because he considered it an unfair deal, which has failed to create peace.

Ahead in today’s session, market players will monitor the release of Baker Hughes’ weekly oil rig count for the United States as of 18:00 GMT.

FortFS