Gold prices edged lower in European trade on Wednesday, pausing for breath after rallying to the highest level in around three weeks in the prior session
GOLD – Gold prices edged lower in European trade on Wednesday, pausing for breath after rallying to the highest level in around three weeks in the prior session. Gold’s gains came as the dollar sank to an 11-month low after a second attempt by Republicans to replace Obamacare failed, delivering a major blow to President Donald Trump’s agenda. Investors were now more doubtful over the future of the Trump administration’s planned tax reforms, given the difficulty the healthcare bill has faced in making progress. Fading expectations for another rate hike by the Federal Reserve this year further weighed on the greenback. Futures traders are pricing in less than a 40% chance of a rate hike by December, according to Investing.com’s Fed Rate Monitor Tool. Market players will focus on U.S. housing sector data due later in the session to gauge the strength of the world’s largest economy and how it will impact the Fed’s view on monetary policy. The U.S. central bank hiked rates at its June meeting and stuck to its forecast for one more rate hike this year, but recent dovish comments from Chair Janet Yellen and soft inflation data has raised doubts over whether policymakers will be able to stick to their planned tightening path. The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
CRUDE OIL – Oil prices were a bit lower in European trade on Wednesday, as investors looked ahead to weekly data from the U.S. on stockpiles of crude and refined products later in the global day. Elsewhere, Brent oil for September delivery on the ICE Futures Exchange in London dipped 4 cents to $48.80 a barrel, after touching a two-week peak of $49.41 a day earlier. Analysts expect crude oil inventories dropped by around 3.2 million barrels at the end of last week, while gasoline supplies are seen decreasing by 655,000 barrels and distillates are forecast to gain about 1.2 million barrels. Oil prices finished higher on Tuesday, boosted by speculation of possible output curbs in Libya after the head of Libya’s National Oil Corporation said he plans to attend a meeting of global crude producers in Russia on July 22 to share his country’s production plans. In May, OPEC and some non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018. So far, the agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria.
NATURAL GAS – U.S. natural gas futures rallied to the highest level in more than two-weeks on Tuesday, as updated weather forecasting models continued to point to increased summer demand in the coming weeks. Prices notched their second straight session of gains on Monday amid bullish weather forecasts. Hot high pressure over the western, central, and southern U.S. will strengthen and expand as the week progresses, eventually dominating almost the entire country besides the far northern U.S. with highs of upper 80s to 100s for strong national demand. Longer-term models showed the western, central and southern U.S. will be hot with highs of upper 80s to 100s through August 1, due to strong high pressure. Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on summer cooling demand. Nearly 50% of all U.S. households use gas for cooling. Market participants looked ahead to weekly storage data due on Thursday, which is expected to show a build in a range between 27 and 38 billion cubic feet in the week ended July 14.
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