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Precious Metals Rose on Higher US Inflation Expectations Print E-mail
ONG Focus | Insights | Written by Oil N' Gold | Wed Jan 03 18 00:06 ET

Crude oil prices pulled back but both benchmarks remained above US$ 60/bbl. Concerns over output disruption amidst Iranian protests were offset by the resumption of production in Libya. The front-month WTI contract slipped -0.08% and ended the day at 60.37, while the Brent contract was down -0.45% and settled at 66.57. Precious metals strengthened across the board, probably as US inflation expectations improved. The benchmark Comex gold and silver contracts climbed +0.57% and +0.36% respectively. For PGMs, the Nymex platinum and palladium contract gained +1.03% and +1.51% respectively. in the FX market, US dollar remained under pressure as traders were cautiously awaiting the FOMC minutes and the employment report.

On the dataflow, US manufacturing PMI was revised higher, by +0.1 point, to 55.1 in December. This marks the highest level since March 2015 an improvement from 53.9 in the prior month. According to Markit, US manufacturing activities "ended 2017 on a high". It suggested that "output growth accelerated to its fastest since the start of the year on the back of a marked upswing in demand as the year came to a close". Moreover, "the upbeat mood is underscored by an increased appetite to hire new staff, with the survey indicating that factory payroll numbers are rising at a rate not seen for over three years".

In the Eurozone, the manufacturing PMI stayed unadjusted at 60.6 in December. While the German reading stayed at 63.3, unchanged from the flash reading, those for France and Italy were revised lower, by -0.5 point and -0.9 point, to 58.8 and 57.4, respectively. According to Markit, Eurozone's manufacturing sector boom "gained further momentum in December, rounding off the best year on record and setting the scene for a strong start to 2018". It noted that forward-looking indices, including new orders and purchasing growth, bode well for the New Year. Elsewhere, UK's manufacturing PMI fell to 56.3 in December, from 58.2 a month ago. The market had anticipated a milder drop to 57.9. Despite the bigger-than-expected drop, Markit noted that the country's manufacturing sector ended 2017 on a "positive note" . It added that the headline PMI has now remained above the 50 for 17 consecutive months while the average reading over the final quarter of 2017 was the best since the second quarter of 2014.

Today's focus is on the FOMC minutes and the ISM manufacturing index. For the latter, the reading probably stayed unchanged at 58.2 in December. The ISM price paid index might have slipped -1 point to 64.5. In the Eurozone, Germany's number of unemployment probably declined -13K in December, following the -18K contraction a month ago. The unemployment rate might have eased to 5.5% from 5.6% in November.


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