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Gold prices rise over 1% as oil price spike triggers uncertainty

MCX Gold futures traded 1.28 per cent, or Rs 479, higher at Rs 38,003 per 10 gm.|
Sep 16, 2019, 11.10 AM IST
Gold prices advanced over 1 per cent in early trade on Monday on a surge in safe-haven demand after drone attacks on Saudi Aramco’s oil facilities hit 5 per cent of the world’s crude supply.

MCX Gold futures traded 1.28 per cent, or Rs 479, higher at Rs 38,003 per 10 gm. White metal silver gained 2.50 per cent, or Rs 1,140, to trade at Rs 46,901 per 1 kg.

Crude oil prices soared more than 10 per cent in international markets after attacks on two Saudi Arabian plants over the weekend slashed output in the world’s top producer by a half. US President Donald Trump blamed Iran, raising the possibility of a military strike on the country.

WTI crude gained 10.68 per cent to $60.71 a barrel while Brent gained 11.77 per cent to $67.31.

The bullion counter may trade with an upside bias, as investors scurried for safe-haven assets after weekend attacks on Saudi Arabia’s oil facilities risked disrupting global energy supplies and increasing tensions in West Asia, said SMC Global Securities.

“Gold (Oct) can increase towards Rs 38,200 while taking support near Rs 37,800 while silver (Dec) can increase towards Rs 47,500 while taking support near 46,500,” SMC said.

Market participants are awaiting US Federal Open Market Committee meeting over Tuesday and Wednesday, with a press conference by Chair Jerome Powell scheduled to follow the release of the central bank’s statement.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.67 per cent to 874.51 tonnes on Friday.

“The Drone attack on Saudi Aramco oil facilities on Saturday is estimated to impact 5 million barrel per day of oil production and further news that Saudi Arabia plans to shut down about half of its output after the strike will impact overall oil prices and the global economy,” said Pritam Kumar Patnaik, Head Commodities, Reliance Commodities.

“The impact of the same has been already witnessed on both NYMEX and Brent oil prices, which have rallied more than 10 per cent. The immediate range for Nymex crude will be $56-63 per barrel,” he said.

“With the US accusing the Iranian government of orchestrating the attack and Iran in turn threatening war, thereby further destabilising the region at large and further impacting future supplies, oil prices are expected to remain firm,” Patnaik said.

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