What’s next? – GOLD, OIL 18.05.18

GOLD

Gold futures were down in Asian hours on Friday amid increasing US Treasury yields and a continuous strengthening greenback.

The dollar-denominated metal is sensitive to moves in the US dollar. A stronger greenback makes gold less attractive for holders of foreign currency, damping demand for safe-havens.

On the Comex division of the New York Mercantile Exchange, gold futures were up 0.02 percent at $1.289.70 a troy ounce as of 6:40 GMT.

The yield of US 10-Year Treasuries  moved to 3.122%, adding 0.43%, in early trading hours - the highest level since 2011. Higher yields boost the dollar’s position.

The US dollar index, which measures the greenback’s strength against a basket of six major competitors, was down 0.04 percent at 93.34 by the time of this writing.

Still, the world’s most popular currency remained well above the 93 level. Overnight, the dollar index reached a fresh 2018 high at 93.46.

Expectations for Federal Reserve monetary policy chances are currently a key issue for investors. The Fed has anticipated three interest rate hikes for this year.

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.

“Our judgment at the Dallas Fed is that we are either at or already past full employment,” said Dallas Fed President Robert Kaplan at a chamber of commerce event in Richardson, Texas.

OIL

Oil futures were higher on Friday in Asian hours, with Brent crude getting closer to $80 per barrel, a level it has not seen since November 2014, as supplies continued to decrease.

The US West Texas Intermediate crude contracts rose 0.32 percent to $71.72 per barrel as of 06:25 GMT. Meanwhile, Brent futures were up 0.29 percent at $79.53 a barrel.

The US Energy Information Administration said crude inventories dropped by 1.4 million barrels in the week ended May 11, while gasoline eased 3.79 million barrels.

Officials figures confronted data by American Petroleum Institute (API), which previewed a nearly 5 million barrels build in crude stockpiles.

In Venezuela, output eased to 1.5 million barrels in April, reaching its lowest level in decades as the economic crisis in the country is getting worse.

In other news, the International Energy Agency (IEA) reduced its global oil demand growth forecast for 2018 from 1.5 million bpd to 1.4 million bpd.

Ahead in the session, players will await Baker Hughes weekly oil rig count at 18:00 GMT.

FortFS