What’s next? – GOLD, OIL 15.05.18

GOLD

Gold futures were down in Asian hours on Tuesday despite the dollar trading slightly lower against the other major currencies.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.52 percent at $1.311.30 a troy ounce as of 5:15 GMT.

The US dollar index, which measures the greenback’s strength against a basket of six major competitors, was up 0.19 percent at 92.64 by the time of this writing.

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

The yellow metal was supported by a rising safe-haven demand after Israeli troops killed dozens of Palestinian protesters on the Gaza border on Monday.

"We're seeing little sparks of interests on the back of these issues but at the moment it doesn't look significant enough to raise concerns over the medium-term which support a more sustained level of safe-haven buying," ANZ analyst Daniel Hynes wrote in a note.

Hynes also explained that metal prices are likely to remain under pressure until the next rate hike by the Federal Open Market Committee.

Fed funds tracked by CME Group’s FedWatch tool show that market participants are currently weighing in a 95 percent probability of a rate hike in the June monetary policy meeting.

Ahead in the session, investors will be looking at relevant report from Europe and the United States. In Germany, the first-quarter gross domestic product is scheduled at 06:00 GMT, followed by UK’s average earnings, claimant count change and unemployment rate at 08:30 GMT.

Half an hour later, focus will be turn back to Germany, with ZEW economic sentiment for May eyed. Eurozone’s Q1 GDP and industrial production figures for March will be out at 09:00 GMT.

Later on, US retail sales for April and the NY Empire State manufacturing index for May are up at 12:30 GMT, followed by business inventories for March at 14:00 GMT. TIC net long-term transactions for March will be available at 20:00 GMT.

OIL

Oil futures were moderately higher in Asian hours on Tuesday, with market participants looking ahead to inventory estimates by the American Petroleum Institute.

The US West Texas Intermediate crude contracts gained 0.08 percent to $71.02 per barrel as of 05:30 GMT. Meanwhile, Brent futures were up 0.06 percent at $78.28 a barrel.

Crude benchmarks settled in green territory on Monday as market players got excited after OPEC’s monthly report showed excess global crude supply has been nearly eliminated.

The Organization of the Petroleum Exporting Countries said its output increased by 12,000 barrels per day to 31.9 million barrels per day in April.

On the other hand, oil inventories in developed countries dropped 9 million barrels from the five-year average, which is down from 340 million barrels above the average in Jan 2017.

The draw in supplies comes as OPEC and non-OPEC countries continued to comply with output cuts implemented in 2017 and as Venezuela’s production is under heavy pressure.

Global oil demand is expected to hit 98.85 million barrels a day, OPEC said in its monthly report, adding 25,000 barrels to a previous forecast.

Meanwhile, US shale producers are far from scaling down their output, with the oil rig count standing at 844 units, its highest level since March 2015. Baker Hughes reported a 10 rigs build for the week ended May 11.

Ahead in today’s session, market players will be monitoring fresh inventory estimates by the American Petroleum Institute as of 20:30 GMT.

FortFS