Gold prices hit close to a three-week low on Friday as dollar strength continued to put pressure on the precious metal and risk appetite for equities remained in full swing.
Gold Prices Hold Near 3-Week Low as Dollar Gains – Gold prices hit close to a three-week low on Friday as dollar strength continued to put pressure on the precious metal and risk appetite for equities remained in full swing. Gold is sensitive to a stronger dollar as the gains in the greenback made the precious metal more expensive for holders of foreign currency. The dollar found further support overnight after the U.S. House passed a budget resolution Thursday, paving the way for Congress to move on to “massive tax cuts” proposed by President Donald Trump. The greenback found upside earlier on Thursday in its exchange with the euro as the single currency felt pressure from the European Central Bank’s decision to pare its bond purchases while extending its monetary stimulus program for a period of nine months. ECB president Mario Draghi’s indicated that the central bank’s asset purchase program is “open ended”, leaving the door open to a prolonged period of monetary stimulus beyond September 2018. Draghi further assured market participants that the ECB would continue to reinvest principal payments from maturing bonds in the program well after the monetary authority stops expanding its balance sheet.
NATURAL GAS – U.S. natural gas prices weakened for a third day on Thursday after weather forecasts pointed towards less heating demand over the next two weeks and record output. The weekly storage report didn’t help matters, coming in as expected. First the weather, Thompson Reuters is forecasting less natural gas will be used next week by homes and businesses. U.S. gas consumption is now projected to average 80.9 billion cubic feet per day next week, down from an earlier forecast of 81.5 bcfd. On Thursday, the U.S. Energy Information Administration said utilities added a smaller-than-usual 64 billion cubic feet of gas into storage in the week to October 20, leaving the amount of fuel in stock about 1 percent below the five-year average for this time of year at around 37 trillion cubic feet.
Speculators Probing for Upside Breakout Area – U.S. West Texas Intermediate and international-benchmark crude oil finished lower on Thursday with the latter posting the biggest gain. Prices inched lower early in the session due to an unexpected increase in U.S. crude inventories, high U.S. production and exports. Prices recovered from the early session weakness to post a strong gain, boosted by comments from Saudi Arabia’s Crown Prince backing the extension of OPEC-led production cuts.
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