What’s next? – GOLD, OIL 22.05.18

GOLD

Gold futures were slightly higher in Asian hours on Tuesday as the dollar’s growth was paused due to profit taking and lack of informative support.

On the Comex division of the New York Mercantile Exchange, gold futures were up 0.15 percent at $1.288.90 a troy ounce as of 6:00 GMT.

The yellow metal settled higher on Monday, recovering as the dollar turned downwards, but remained under pressure amid easing trade war concerns.

Gold futures bounced from a local low of $1,281.20 as the dollar moved away from a five-month peak reached on the back of higher 10-year Treasury bond yields.

The US dollar index, which measures the greenback’s strength against a basket of six major competitors, was down 0.05 percent at 93.54 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, reducing demand for safe-havens.

The metal began a new week under pressure following positive developments on the US-China trade relations front. US Treasury Secretary Steven Mnuchin said in an interview over the weekend that the trade war was “on hold”.

According to CFTC COT data, money managers trimmed their net long positions in gold futures to 92,400 lots from 107,400 lots in the week ended May 16.

Ahead in the day, attention will be mainly directed to speeched by the Bank of England, including Governor Mark Carney as of 08:15 GMT. Inflation Report Hearings in the UK are due to start at 09:00 GMT. Also, CBI Industrial Trends Orders for May are up one hour later.

OIL

Crude oil futures were higher in Asian hours on Tuesday amid rising chances of sanctions against key OPEC producers by the United States government.

The US West Texas Intermediate crude contracts rose 0.30 percent to $72.57 per barrel as of 06:30 GMT. Meanwhile, Brent futures were up 0.29 percent at $79.45 a barrel.

Crude benchmarks settled in green territory on Monday, with Venezuela’s general elections flagged as illegitimate by the international community, increasing chances for US sanctions against the country’s oil exports.

President Nicolas Maduro was re-elected for office on Sunday amid a climate of social discontent and deep economic crisis. Results of the election are seen as fraudulent.

US Secretary of State Mike Pompeo said sanctions against Iran will be the “strongest in history when complete.” His remarks come only a week after President Donald Trump pulled the US out from the international nuclear deal signed in 2015.

US sanctions against Venezuela and Iran are expected to reduce oil production levels in those nations, pushing supply lower and favoring higher energy prices.

Citigroup analysts have raised the bank’s forecast for the average crude barrel price by $10 to $75 per barrel in 2018.

"Our expectation for balancing, from a market currently in deficit, has been pushed to the second quarter of 2019 from the third quarter of 2018 period we expected previously," the bank said.

Ahead in today’s session, attention will be directed to weekly crude and refined products stockpiles estimates by the American Petroleum Institute as of 20:30 GMT.

FortFS