Gold falls towards 2-week lows as trading starts to wind down
Gold prices fell towards two-week lows on Wednesday, as the curtain begins to fall on 2015. Trading volumes are expected to remain light in the final few days of the year, reducing liquidity in the market. Gold for February delivery on the Comex division of the New York Mercantile Exchange shed $7.80, or 0.73%, to trade at $1,060.20 a troy ounce during U.S. morning hours. It earlier fell to $1,059.80, a level not seen since December 18. Market participants were eyeing a report on U.S. pending home sales due later Wednesday after a recent run of mixed economic data failed to offer clues as to how fast the Federal Reserve will raise interest rates next year. With the first U.S. rate hike since 2006 out of the way, investors are now focusing on the pace of future rate increases.
Oil down 3 percent on surprise U.S. crude build
Crude prices fell 3 percent on Wednesday, with Brent sliding toward 11-year lows, after an unusual build in U.S. stockpiles and signs Saudi Arabia will keep adding to the global oil glut.
Crude inventories in the United States, the world's largest petroleum producer, rose 2.6 million barrels last week, the U.S. Energy Information Admkinistration said. Analysts polled by Reuters had expected a draw of 2.5 million barrels.
Stockpiles hit record highs at the Cushing, Oklahoma delivery hub for U.S. crude's West Texas Intermediate (WTI) futures. Gasoline and heating oil also posted larger-than-expected stock builds. "In all the years I have been doing this, I have never seen builds in the last week of December," said Tariq Zahir, crude futures trader at Tyche Capital Advisors in Long Island, New York.
"At least for tax consequence reasons, refiners always ramp up runs at the year-end, and there's a draw. This is a first for me."
Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland, concurred. "This week's EIA data is just another bearish data point in a series of many that have dominated 2015 and will likely continue to do so heading into 2016."
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