What’s next? – GOLD, OIL 06.06.18

GOLD

Gold futures were down in Asian hours on Wednesday despite the greenback once again moved below the psychological level of 94 points.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.10 percent at $1,300.90 a troy ounce as of 10:10 GMT.

The dollar remains under pressure as commercial tensions between the United States and key allies such as Mexico and Canada continue to weigh on sentiment.

On Tuesday, ABC News reported that US Treasury Secretary Steven Mnuchin has urged President Donald Trump to exempt Canada from import tariffs on steep steel and aluminum.

According to sources, Mnuchin introduced this idea to the President during a meeting of the administration’s senior economic policymakers, including director of the National Economic Council Larry Kudlow, Commerce Secretary Wilbur Ross, Trade advisor Peter Navarro, trade representative Robert Lighthizer and chief of staff John Kelly.

The US dollar index, which measures the greenback’s strength against a basket of six major competitors, was down 0.14 percent at 93.74 by the time of this writing.

Gold is sensitive to moves in the US dollar. As the metal is denominated in US dollars, a stronger currency makes it more expensive for investors holding other currencies.

Ahead in today’s session, traders will keep an eye on the following releases: US Q1 nonfarm productivity, unit labor costs and the trade balance for Apr are all coming together at 12:30 GMT.

OIL

US crude contracts were up in early trading hours on Wednesday following an industry report that showed a reduction in local crude supplies.

The US West Texas Intermediate crude contracts eased 0.27 percent to $65.34 per barrel as of 10:10 GMT. Meanwhile, Brent futures were up 0.25 percent at $75.57 a barrel.

Overnight, the American Petroleum Institute estimated a 2-million-barrel decline in crude stockpiles for the week ended June 1, compared to an expected fall of 1.8 million barrels.

The report also showed gasoline supplies rising by more than 3.8 million barrels, while analysts had forecasted a 587,000-barrel gain.

On the other hand, distillate products eased by 871,000 barrels, against expectations for a 784,000-barrel increase, latest figures revealed.

Ahead in today’s session, market participants will keep an eye on official inventories by the US Energy Information Administration as of 14:30 GMT.

On Tuesday, Russian Energy Minister Alexander Novak said OPEC and non-OPEC countries will decide on how to adjust the current agreement on oil output cuts depending on demand levels.

"We have to look into the situation which has panned out on the market today, from the point of view of the volume cuts, inventories decline, shortages on the market, and to adjust the figures," Novak said.

"And to look into the possibility of the adjustment of the cuts by taking into account demand," he added.

Market sentiment on crude remained negative, as participants continued to weigh the possibility of higher production levels by OPEC.

The oil cartel and its allies will gather in Vienna on June 22 to decide whether it’s time to halt cuts.

FortFS