Oil prices continued to fall for a third session in the latest trading, with Brent crude futures down about 2.2% at $102.6 a barrel and U.S. West Texas Intermediate crude down about 1.7% at $100.2, while gold rose 1.2% to $4,395 an ounce and the yen weakened despite the Bank of Japan raising interest rates to their highest level in 31 years.
Efforts to restore exports weigh on oil
Brent crude is heading for its first weekly loss in three weeks, down about 2% from Friday's settlement of $104.61, while U.S. crude is hovering around its level at the end of last week, when it closed at $100.05.
Prices fell despite the widening war in the Middle East and a new exchange of cross-border strikes on Thursday between Saudi Arabia and the Iran-aligned Houthis, as traders focused on Riyadh's efforts to restore some of its damaged export capacity.
Oil prices had climbed to their highest level in nearly four months during the week after crude shipments were suspended at the Red Sea port of Yanbu and Riyadh canceled some cargoes bound for Europe following damage to the East-West pipeline in an attack last week.
But the market reversed course after reports that Saudi Arabia was seeking to restore about half of the pipeline's capacity within days, while also offering additional cargoes to Asian refineries through ship-to-ship transfers off Oman's Sohar port.
Priyanka Sachdeva, head of market analytics at Phillip Nova, said efforts to restore Saudi export capacity had eased some supply concerns, but the key question remained when actual flows would return to normal. She added that a sustained improvement in shipping traffic through the Strait of Hormuz could lead to a further reduction in the geopolitical risk premium, although transport activity remained fraught with risk.
The naval forces of Iran's Islamic Revolutionary Guard Corps said an oil tanker flying the Togo flag came under attack on Thursday while attempting to “pass illegally” through the Strait of Hormuz.
Gold rises as oil and yields fall
Spot gold rose about 1.2% to $4,395 an ounce after the drop in oil helped ease some inflation concerns, alongside declines in the dollar and U.S. Treasury yields. U.S. gold futures also rose 0.6% to $4,425.80 an ounce in early trading.
Ahmed Asiri, a research analyst at Pepperstone, said gold's correlation with oil could weaken if a sharp correction in crude prices lowered inflation and expectations for interest-rate increases, or if a major military escalation pushed the global economy into recession.
The Federal Reserve raised interest rates by a quarter of a percentage point on Wednesday to a range of 3.75% to 4%, its first increase since 2023, saying inflation remained elevated. Although higher rates typically weigh on gold because it pays no income, they did not prevent its recovery as oil and the dollar declined.
Goldman Sachs maintained its forecast for gold to reach $5,400 an ounce by the end of 2027, saying monetary tightening was likely to slow the advance without stopping it. Silver rose about 2.4% to $66.73 an ounce, platinum climbed 2.2% to $1,810, and palladium gained about 2.9% to $1,312.
Rate hike fails to support yen
The yen fell about 0.7% to 157.1 per dollar after the widely expected Japanese rate hike failed to provide lasting support for the currency. The Bank of Japan raised its policy rate by a quarter of a percentage point to 1.25%, the highest level since April 1995, but the decision was not unanimous, with two members favoring no change to monetary policy.
The euro stood at about 180.4 yen, while it was steady against the dollar at around $1.1482. Sterling traded at $1.3373 after touching a two-and-a-half-month low following the Bank of England's decision to keep interest rates at 3.75%.
The dollar index, which measures the U.S. currency against six major currencies, was steady at around 100.28 points after edging down from its highest level in two and a half months. In the cryptocurrency market, Bitcoin rose about 1.4% to $77.5 thousand, while Ether gained about 1.5% to $2,484.
