Oil, gold rally as fixed interest rates in the U.S. and U.K. propel prices upwards

Mixed expectations surrounding future prices
Oil, gold rally as fixed interest rates in the U.S. and U.K. propel prices upwards
Oil and gold experience sharp rise

Oil prices maintained on Friday their stability, continuing the trend of an observed increase from Thursday. Also, gold prices experienced an increase during early trading on Friday, following the interest rate announcement.

This comes amidst ongoing tensions between Israel and Hamas, raising concerns that the conflict could potentially expand to other oil-rich and strategically significant regions in the Middle East, which serve as crucial global transit routes.

On Friday, Brent crude futures saw a modest increase of six cents, reaching $86.91 per barrel. Simultaneously, U.S. West Texas Intermediate (WTI) crude futures experienced a slightly higher rise of 12 cents, equivalent to a 0.2 percent increase, reaching $82.58 per barrel.

Read more: Oil prices slip over 1 percent as concerns ease over Middle East supplies

On Thursday, both benchmarks witnessed a significant surge of over $2 per barrel. Brent crude is currently on track for a decline of approximately four percent for the week, while West Texas crude is expected to face a decline of 3.5 percent.

During Thursday’s trading sessions, WTI experienced a 0.9 percent increase, reaching $81.2 per barrel for December delivery. Similarly, Brent crude oil also rose by 0.9 percent, reaching $85.41 per barrel.

According to analysts, there is a prevailing expectation that oil prices may experience declines in the near future. This anticipation is influenced by the U.S. Central Bank (Federal)’s hint of potential future interest rate hikes, as well as the easing concerns regarding the possibility of supply disruptions arising from the ongoing Middle East conflict.

Analysts forecast that Saudi Arabia, the world’s largest oil exporter, will reaffirm its position by extending the 1 million barrel per day production cut through December.

The forthcoming data on the number of U.S. oil rigs, scheduled for release on Friday, is generating significant anticipation due to its potential to offer valuable insights into future production levels.

Gold prices surge

Gulf banks mirrored the Fed’s move by implementing interest rate stabilization. Yesterday, the Bank of England (BoE) set interest rates at 5.25 percent. Likewise, the Central Bank of Egypt (CBE) opted for stability in deposit yield rates, lending for one night, and the price of the Central Bank’s main operation, at 19.25 percent, 20.25 percent, and 19.75 percent, respectively. The credit and discount price were also set at 19.75 percent.

During Friday’s trading session, gold futures prices experienced an increase, primarily driven by the decline of the U.S. dollar following the U.S. Fed’s decision on interest rates. In times of crises and fears, investors often turn to gold as a safe haven, further contributing to its rise in demand.

On Thursday, the value index of the U.S. dollar against other major currencies dropped to 105.81 points.

According to the World Bank’s report on future commodities, geopolitical unrest has once again impacted the gold market. The report suggests that the increased demand for safe-haven assets is expected to drive gold prices higher. Any potential escalation in the conflict likely to generate additional chaos in the Middle East and further contribute to the upward trend in gold prices.

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