Oil and gold prices rally on Syria jitters

Brent crude rose to a six-month high on Wednesday as western countries prepared to attack Syria, raising concerns over the security of oil supplies across the Middle East, which pumps a third of the world’s oil.

By (Reuters)

Published: Thu 29 Aug 2013, 11:16 AM

Last updated: Sat 4 Apr 2015, 10:57 AM

Gold prices rallied above $1,430 an ounce to 3-1/2 month highs on Wednesday as rising tensions over Syria sparked safe-haven demand and a scramble among investors to cut their bets on falling prices.

The United States and its allies are readying for air strikes against the forces of President Bashar Al Assad, blamed for poison gas attacks last week. But the timing of any action was unclear.

A prolonged outage at several Libyan oilfields also underpinned prices, with Brent gaining four per cent and the US benchmark three per cent so far this week. Brent was at $115.83, up $1.47 at 1214GMT after earlier reaching a six-month high of $117.34 a barrel. US crude rose $1.45 to $110.46, after hitting an intraday peak of $112.24 — its highest since May 2011.

Over the coming days, Brent could surge to $125, either in anticipation of the attack or in reaction to its start, he said.

Oil supply from Opec producer Libya has already been reduced to a trickle after an armed group shut down a pipeline linking its largest western oilfields to the ports. Total Libyan oil output amounts to just under 200,000bpd, compared with pre-war levels of around 1.6 million bpd, according to a Reuters estimate, the worst disruption since the civil war in 2011.

Gold climbs to 3-1/2-month

The yellow metal hit a peak of $1,433.31 an ounce, its highest since May 14, as the United States and its allies geared up for a probable military strike against Syria.

Spot gold was up 0.4 per cent at $1,421.44 an ounce at 1403GMT, while US gold futures for December delivery were up $1.60 an ounce at $1,421.30. “The latest move upwards is certainly related to safe-haven buying on the back of a potential attack on Syria,” ABN Amro commodity analyst Georgette Boele said.

“But you already had a turnaround in sentiment around a week ago when people started to get nervous about the timing of the Fed tapering (after mixed US data),” she added.