What’s next? – GOLD, OIL 28.05.18

GOLD

Gold prices moved lower on Monday following news that the summit between President Donald Trump and North Korean leader Kim Jong-un is back on track.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.54 percent at $1,296.60 a troy ounce as of 7:10 GMT.

Trump tweeted on Sunday: “Our United States team has arrived in North Korea to make arrangements for the Summit between Kim Jong Un and myself.”

He added: “I truly believe North Korea has brilliant potential and will be a great economic and financial Nation one day. Kim Jong Un agrees with me on this. It will happen!”

The US dollar index, which measures the greenback’s strength against a basket of six major competitors, was down 0.32 percent at 93.83 by the time of this writing.

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

Last week, the metal was supported by Trump’s decision to unexpectedly call off the meeting. However, efforts by South Korea and North Korea revived the initiative.

No economic data is due on Monday. US markets will remain closed in observance of the Memorial Day holiday and therefore, attention will turn to the news front.

Ahead this week, traders will count on a fresh employment report by the US Labor Department on Friday, which is key data for the Federal Open Market Committee.

OIL

Oil futures extended losses in Asian hours on Monday as market participants weighed a possible halt on OPEC and non-OPEC output cuts.

Last week, Russia and Saudi Arabia oil ministers said the possibility of reducing production cuts in the near term was still up for discussion.

In the last few days, speculation has been building up about a potential increase of production levels in order to avoid market unbalance.

This idea gained popularity among investors following the recent developments in the Middle East. As the US is preparing a batch of new sanctions against Iran after pulling off from the Nuclear deal, traders believe those measures would push down Iranian oil exports.

On the other hand is Venezuela, which could also be target of US economic sanctions following President Donald Trump’s accusations against newly-elected President Nicolas Maduro about unconstitutional practices.

The US West Texas Intermediate crude contracts dropped 1.93 percent to $66.57 per barrel as of 08:20 GMT. Meanwhile, Brent futures were down 1.70 percent at $75.14 a barrel.

On Friday, Baker Hughes oil rig count showed an increase of 15 units, bringing the total count to 859 rigs, the highest level since March 2015.

FortFS