Gold has struggled so far this week after enjoying a two-week winning streak in May. Up until now, the buck-denominated metal has been supported above all by a soft US dollar. But with the greenback showing signs of life after Thursday’s release of strong ADP employment figures, expectations about a June rate hike have risen closer to 100% again. Those expectations would be further cemented if we have a strong nonfarm payrolls report today. As a result, the dollar may rally which could undermine the precious metal.
The Energy Information Administration failed to wow the crude oil market even after it reported the biggest crude oil drawdown of the year. The reason is a technical weakness on the charts, coupled with the promise of more Libyan oil production and the fact that U.S. oil production increase tied the highest level since November of 2015. Not even President Trump’s withdrawal from the Paris Climate Accord could give the market the lift it needed.
If you look at data from the American Petroleum Institute (API) you will see that it is obvious that OPEC/non-OPEC production cuts are starting to have an impact on U.S. oil inventory. The API not only reported a whopping 8.67-million-barrel drawdown in oil inventory last week, they also reported that during the last five weeks there has been a drop of over 19.277 million barrels.