LONDON (Commodity Online): Saudi Arabian comments on the crude oil price could be supportive for gold, said HSBC in a research note.
The country’s oil minister, Ali al-Naimi, tells CNN that the kingdom is now targeting $100 per barrel as a reasonable price for crude oil, up the $70-$80 range that the minister said was a fair back in late 2008. This is significant, since the U.S. Energy Information Agency has indicated Saudi Arabia is the only country with sufficient spare capacity to ramp up oil production quickly and therefore influence prices either higher or lower, HSBC added.
“Permanently higher oil prices could have significant bullish implications for gold. Higher oil prices, in addition to being inflationary, may raise geopolitical tensions and also boost the large commodity indices, of which gold is a component,” HSBC concluded.
