Oil prices continued to rise on Friday, bolstered by news that production cuts from the Organization of the Petroleum Exporting Countries (OPEC)
Gold Hits 1-Month High as Trade War Fears Spark Safe Haven Demand – Gold prices spiked to a one-month high in mid-morning European trade on Friday as mounting fears over the prospect of a trade war stoked demand for the precious metal. Invoking Section 301 of the 1974 Trade Act, U.S. President Donald Trump on Thursday signed a memorandum announcing tariffs on about $50 billion worth of Chinese exports, citing China’s unfair seizure of U.S. intellectual property. Chinese officials were quick to respond on Friday, warning the U.S. to “pull back from the brink”. “China doesn’t hope to be in a trade war, but is not afraid of engaging in one,” the Chinese commerce ministry responded in a statement in which it outlined plans to target agricultural goods important to rural U.S. regions that tend to support Trump. The world’s second largest economy announced plans to levy additional duties on up to $3 billion of U.S. imports including fresh fruit, wine and nuts in response to import tariffs Trump announced earlier this month on steel and aluminum, which were due to go into effect on Friday. The Fed refrained from adding a fourth hike to its forecasts for the year, appearing less hawkish than some traders had feared. Higher interest rates tend to weigh on demand for gold, which doesn’t bear interest, in favor of yield-bearing investments.
Oil Prices Rise on Hints of OPEC Extending Production Cuts – Oil prices continued to rise on Friday, bolstered by news that production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and Russia could be extended into 2019. Saudi Arabian Energy Minister Khalid al-Falih said on Thursday that OPEC members will need to continue coordinating with Russia and other non-OPEC oil-producing countries on supply restraints in 2019 to reduce the global oil oversupply. OPEC, of which Saudi Arabia is the de-facto leader, has been cutting crude output by 1.8 million barrels per day (bpd) to prop up oil prices. The pact began in January 2017 and is set to expire at the end of 2018, but Saudi Arabia now seems to be pushing for an extension. The price of oil has been caught between between the OPEC supply cut agreement and the rise in U.S. crude production. Investors worry that the rise in U.S. crude could dampen the efforts made by OPEC to end a supply glut.
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