Gold steady ahead of FOMC minutes

Gold prices are little changed ahead of the release of the FOMC minutes that could provide further reiterations that policy is on hold for the foreseeable future and that they are not ready to discuss reducing asset purchases.   Gold pared earlier losses after the Hungarian central bank tripled their gold holdings in March.  The Fed might think inflation will be transitory, but many emerging market central banks are fearful of runaway inflation and that could trigger steady central bank bullion purchases going forward.

Gold is waiting to see if the Fed minutes triggers a catalyst for the bond market rout to resume.  If Treasury yields remain capped, gold could continue appreciating.

Oil

Crude prices remained heavy despite a larger-than-expected draw as demand outlook took a small hit after the AstraZeneca COVID vaccine was halted in the UK for people under 30 years old.  Europe’s COVID vaccine rollout has been very disappointing and today’s announcement that the UK will offer alternatives to people under 30 could lead to further vaccine hesitancy.

The EIA crude oil inventory report was mixed and hardly provided any reason to become more optimistic with the short-term outlook.  The headline crude inventory draw of 3.5 million bpd was larger than the 1.6 million forecasted drop, and the prior drop of 876,000 bpd.   Jet fuel demand is still weak, but that will change quickly as Americans get the travel bug once they are fully vaccinated.  Gasoline demand was steady but considering Spring Break finished, that is probably somewhat a bullish indication.

US crude production fell 200,000 barrels to 10.9 million bpd, a welcome sign for OPEC+ members who are concerned about conceding market share to the Americans.

WTI crude seems poised to consolidate a while longer between the USD57 and USD62.50 range.