Oil prices eased in intraday trade on Friday as concerns over disruption of supplies because of Saudi Arabia-led air strikes in Yemen abated, while gold pared down gains on profit booking and rebound in the dollar after a seven-day rally, its longest gaining streak since August 2012.
Still, brent crude oil headed for nearly a 5% jump this week, the biggest since early February, while the US crude benchmark was poised for a 10% weekly jump — the sharpest since the start of 2011. Brent and US crude varieties had jumped 4.8% and 4.5%, respectively, on Thursday, responding to the Sunni-ruled nations’ airstrikes in Yemen against Shiite Houthi rebels. Gold, too, is set for a second straight weekly advance, despite a drop on Friday.
Having hit an intraday low of $57.76, brent crude declined 90 cents to $58.29 a barrel by 1040 GMT. The WTI crude lost $1.00 at $50.43 a barrel.
A Goldman Sach report said the attack on Yemen and the potential easing of sanctions against Iran would have little near-term impact on oil supplies. “We expect both events to have negligible near-term supply impacts, with the build in crude inventories set to continue in 2Q15. Longer term, a deal with Iran could lead to greater Opec supplies although the timing of the sanction relief remains uncertain,” Goldman Sachs said.
Domestic gold prices may cross Rs 28,000
Domestic gold prices will likely exceed Rs 28,000 per 10 gram within a week if the West Asian crisis continues unabated, according to Rajiv Popley, director at Mumbai-based Popley Group. Having surged by Rs 400 per 10 gm on Thursday, prices in Delhi rose Rs 150 to close at over three-week high of Rs 27,100 on Friday.
“While gold’s appeal would get a boost due to its status as haven asset in times of crisis, if the Yemen crisis continues, crude oil prices could also go up and so would the dollar. Consequently, the rupee would depreciate against the greenback and gold prices for Indian consumers will be higher even if global prices don’t rise sharply. Much will depend on the intensity of the Saudi attacks, though,” Popley said.
Having surged 2% on Thursday to $1,219.40 an ounce, its highest since March 2, responding to the tension in Yemen, spot gold dropped 0.4% to $1,199.15 an ounce by 1054 GMT on Friday. Despite losses on Friday, the precious metal was on course to end the week with a 1.5% gain after its seven-day rally.