GOLD & CRUDE OIL TALKING POINTS:
Gold prices edged lower, echoing a rebound in the US Dollar that undermined the appeal of anti-fiat assets. A drop in the benchmark EUR/USD[1] exchange rate translated into broader strength for the benchmark currency as the leaders of Italy’s emerging populist coalition government selected EU critic Paolo Savona as Economy Minister. US President Trump also talked down trade talks with China[2], cooling earlier optimism that helped drive the greenback lower[3] yesterday.
Crude oil prices declined amid reports that OPEC may increase output next month. That was followed by further headlines suggesting that like-minded countries participating in a cartel-led supply cut scheme – notably, Russia – would join in relaxing production curbs. Reuters cited unnamed officials airing concerns about a disruption of shipments from Venezuela amid political turmoil there as well as the re-imposition of sanctions on Iran as the logic for the in strategy.
FOMC MINUTES, EIA INVENTORY DATA ON TAP
Looking ahead, gold will be focused on minutes from May’s FOMC meeting. If policymakers’ rhetoric appears to point to greater scope for tightening beyond 2018 – a message that appeared to be telegraphed in the policy statement released after this month’s sit-down – a steepening of the priced-in tightening path is likely to bode ill for the yellow metal.
Meanwhile, crude oil will contend with the weekly set of EIA inventory flow statistics. Expectations are set for a 2.07 million barrel drawdown. A private-sector estimate from API published yesterday pointed to a smaller 1.3 million barrel outflow however. Prices may be pressured downward if official statistics print
