Oil And Gold Analysis : June 03, 2013

New York-traded crude oil futures ended Friday’s session sharply lower and hitting the lowest level in a month, as a broadly stronger U.S. dollar and steep losses in U.S. equities markets dampened appeal. U.S. shares and crude oil have traded in tandem in recent weeks, on the belief share prices act as a proxy for economic sentiment and are a bellwether for oil demand. Oil prices struggled for upside traction due to a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies for when the greenback gains. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, gained 0.3% on Friday to settle the week at 83.32. The reports came after the Commerce Department said U.S. consumer spending fell 0.2% in April, confounding expectations for a 0.2% increase, as personal income stagnated. Also on Friday, the Organization of the Petroleum Exporting Countries (OPEC) decided to leave global output quotas unchanged at 30 million barrels per day for the third consecutive time, as widely expected. Ministers from the 12-member group will next convene on December 4.


GOLD
Gold futures came under heavy selling pressure on Friday, after upbeat economic data added to speculation over an earlier-than-expected end to the Federal Reserve’s asset purchase program. Moves in the gold price this year have largely tracked shifting expectations whether the U.S. central bank would end its bond-buying program sooner than expected. A separate report showed that manufacturing activity in the Chicago-area improved at the fastest pace in over a year last month. Market research group Kingsbury International said its Chicago purchasing managers’ index jumped to a seasonally adjusted 58.7 in May from a reading of 49.0 in April. Analysts forecast a reading of 50.3. The robust data bolstered expectations that the Federal Reserve could begin to scale back its USD85 billion a month asset purchase program this year. Any improvement in the U.S. economy could scale back expectations for further easing from the Federal Reserve, weighing on dollar-denominated commodities. The upbeat data came after the Commerce Department said U.S. consumer spending fell 0.2% in April, confounding expectations for a 0.2% increase as personal income stagnated.