Oil Up Over 2%, Gold Trades Higher On Rising Tensions In Middle East | CPT PPP Coverage
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Oil Up Over 2%, Gold Trades Higher On Rising Tensions In Middle East appeared on www.forbes.com by Gaurav Sharma.
(Photo: Marwan Naamani)
Oil futures reversed their declining trend while gold prices rose on Wednesday, following an overnight escalation of hostilities in the Middle East.
That’s after terrorist outfit Hamas said its political leader Ismail Haniyeh had been killed while staying in Tehran for the inauguration of Iran’s newly elected president Masoud Pezeshkian, who took office on Tuesday.
Reports say Haniyeh was killed in an alleged air strike at around 02:00 am local time on Wednesday (11:30 pm GMT, 7:30pm EDT on Tuesday), with both Hamas and Iran accusing Israel of being behind the attack. The Hamas political leader, who was originally from Gaza, had lived in Qatar for several years under heavy security.
The Israel Defense Forces (IDF) declined comment but Iran’s government and its supreme leader Ayatollah Ali Khamenei have vowed to retaliate. The latest development comes a day after Israel said it had killed Fuad Shukr, a senior commander of Iran-backed militia group Hezbollah in a strike in the Lebanese capital Beirut, in an “intelligence-based elimination.”
The attacks on two senior Iran-backed militant leaders in the space of few days has sparked fears of further regional conflict and caused a jump in the price of oil. Brent futures spiked by well over 2% in Asian and early European trading, after having slumped to seven-week lows on Tuesday.
At 06:00am EDT on Wednesday, the Brent Crude September contract was up 2.39% or $1.88 to $80.51 per barrel, while the West Texas Intermediate was trading at $76.73 per barrel, up 2.68% or $2.00. The dual killings throw ceasefire talks between Hamas and Israel into doubt, given Haniyeh was a critical Qatar-based figure in the ongoing negotiations.
Additionally Hezbollah, which has shown solidarity with Hamas, and IDF have been engaged in regular skirmishes on the Israel-Lebanon border since the October 7 attacks by its ally that sparked the conflict in Gaza. This too now threatens to spiral out of control despite international pleas for calm.
However, critically no oil and gas infrastructure, production facilities and shipping lanes / assets have been targeted so far, as hostilities between Iran-backed militias and Israel stumble tragically into their eleventh month.
Concerns over global demand for crude oil have also kept previous price spikes in check, throughout the length of the ongoing conflict, whenever market risk premium levels have shown signs of rising.
“Structural Bull Case” For Gold Intact
Meanwhile, risk averse investors also sought the safety of gold. In Dubai, the spot price of the precious metal was up $7.83 or 0.32% at $2,418.61 per troy ounce at 06:41 am EDT on Wednesday.
Concurrently, Comex Gold futures for December were up 0.55% or $13.50 to $2,465.40 per troy ounce.
Gold is often regarded by many as safe a haven in times of geopolitical strife and periods of market uncertainty. Wednesday’s reigniting of geopolitical risk has therefore further elevated already high gold prices.
A combination of geopolitical tensions, expected interest rate cuts, inflation and central bank buying has kept the “structural bull case” for gold intact, even as prices have risen sharply, according to JPMorgan.
Prices may average $2,500 per troy ounce in the fourth quarter of 2024, the investment bank observed in a recent note to its clients.
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This article originally appeared on www.forbes.com by Gaurav Sharma – sharing via newswires in the public domain, repeatedly. News articles have become eerily similar to manufacturer descriptions.
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