What’s next? – GOLD, OIL 21.05.18

GOLD

Gold futures traded lower in Asian hours on Monday as US-China trade talks seem to have stabilized the situation for the moment, allowing the dollar to count on further support.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.28 percent at $1.287.70 a troy ounce as of 6:10 GMT.

The US dollar index, which measures the greenback’s strength against a basket of six major competitors, was up 0.23 percent at 93.76 by the time of this writing.

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.

US Treasury secretary Steven Mnuchin said on Sunday that both nations had made progress following an intense three-day trade negotiations in Washington.

According to Mnuchin, the announced tariffs on $150 billion worth of Chinese goods are off the table as long as trade representatives continue to work on an agreement.

“We’re putting the trade war on hold,” Mnuchin said during a brief interview.

Ahead in today’s session, traders will be paying close attention a series of Fed speakers, including FOMC Bostic (16:15 GMT), Harker (18:05 GMT) and Kashkari (21:30 GMT).

Investors also continued to monitor 10-year Treasury yields, which held above the psychological 3 percent mark, adding more pressure to the yellow metal.

“The break in 3.10% overnight and a yield high of 3.122% means that there are few significant hurdles for 10-year treasury bonds sell off further until support at 3.21-3.24%,” Bank of Montreal wrote in a note on Thursday.

No relevant economic data is scheduled today.

OIL

Crude oil futures were higher in Asian hours on Monday, supported by news suggesting that China and the US have been able to avoid a trade war for the time moment.

The US West Texas Intermediate crude contracts rose 0.71 percent to $71.88 per barrel as of 05:50 GMT. Meanwhile, Brent futures were up 0.70 percent at $79.03 a barrel.

US Treasury secretary Steven Mnuchin said on Sunday that both nations had made progress following an intense three-day trade negotiations in Washington.

According to Mnuchin, the announced tariffs on $150 billion worth of Chinese goods are off the table as long as trade representatives continue to work on an agreement.

“We’re putting the trade war on hold,” Mnuchin said during a brief interview.

Sentiment in the energy sector was boosted by news earlier today, with Brent crude prices remaining close to the $80 per barrel level, a level not seen since 2014.

Last week, the US Energy Information Administration reported a draw in crude inventories of 1.4 million barrels for the week ended May 11, while gasoline eased 3.79 million barrels.

In other news, General Electric’s company Baker Hughes said oil rigs operating in the United States moved to 844 units last week, the highest mark since March 2015.

Meanwhile, investors remained on edge on hopes that the United States will soon impose a batch of new sanctions against Iran, which could potentially take prices even higher.

FortFS