Crude Oil Prices May Fall Further, Gold Aims to Extend Rebound

London (Nov 3)  Crude oil prices fell for a fourth consecutive day after the EIA inventory data showed 14.4 million barrels were added to stockpiles last week, marking the largest increase in nearly three decades. Gold prices traded higher for most of the day as narrowing US election polls stoked uncertainty and weighed on the US Dollar, stoking anti-fiat demand. The metal trimmed gains following the Fed monetary policy announcement, which traders seemed to interpret as boosting the likelihood of a rate hike in December. Indeed, the priced-in probability of an increase at next month’s sit-down is now 78 percent.

Volatility is likely to remain elevated in the hours ahead as the UK High Court will rule on whether Prime Minister Theresa May has to consult Parliament or not before triggering Article 50 of the Lisbon Treaty, initiating Brexit proceedings. Injecting the mostly pro-EU legislature into the mix could scuttle the administration’s efforts to begin formal negotiations by the end of March 2017 and may even lead to an early election. This could further spook already jittery financial markets, boosting gold and sending the WTI benchmark lower alongside share prices. 

On the data front, a packed calendar including the US service-sector ISM reading as well as factory and durable goods orders figures might have been expected to stoke speculation about Fed policy but pre-election repositioning may overshadow other considerations. RealClearPolitics – a widely tracked poll aggregator – reports that candidates Hillary Clinton and Donald Trump are within less than 2 percentage points of each other as the vote looms ahead. S&P 500 futures are pointing lower ahead of the opening bell on Wall Street, hinting the risk-off mood is poised to continue.

Source: DailyFX