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Peter Davis

An writer at FOMOdrive

  • Oct 09, 2023
  • 3 min read

Gold and oil soar amid Israel's war with Hamas

On Monday, oil and gold prices experienced a surge in value at the start of trading.

Safe haven assets such as the US dollar and yen experienced an increase in value.

Israel was invaded by Hamas on Saturday.

The country's prime minister declared that Israel is in a state of war.

In the meantime, it is possible that Saudi Arabia will increase its oil production.

On Saturday, a massive rocket attack from the Gaza Strip hit Israel, resulting in Hamas militants invading the border areas and seizing a number of facilities, including a military base.

Prime Minister Benjamin Netanyahu declared that Israel is in a state of war due to a retaliatory operation launched against Hamas targets in the Gaza Strip. Since the beginning of the conflict, over 1,000 people have been killed on both sides.

On Monday, the dollar and Japanese yen rose as safe havens due to the market's unease over the violence in the Middle East. Additionally, the US jobs report provided further support for the dollar, according to Reuters.

IG Australia commented that, as anticipated, the markets are currently filled with a great deal of uncertainty. The US dollar is being sought after as a secure asset, with demand for it coming from all directions.

It is possible that the Fed could raise rates one more time before the end of the year, according to Wells Fargo, if the jobs report is "stunningly strong" enough to sustainably bring inflation back to the 2% target. However, this would likely be the last rate hike in this cycle.

On Monday, gold prices rose from a seven-month low, as the attack on Israel over the weekend increased the demand for the safe-haven asset, according to Bloomberg.

Julius Baer is questioning whether the violence in the Middle East is a "tectonic shift" in geopolitics, as this will determine how long safe-haven capital inflows will be.

At the start of trading on Monday, oil prices saw a significant increase and rose by almost 4%. This growth was further bolstered by OPEC's revised projections for oil demand in the medium and long term. According to the cartel, global demand in 2028 is expected to reach 110.2 million barrels per day, up from 102 million b/d in 2023.

The Wall Street Journal has reported that, should oil prices remain high, Saudi Arabia may increase its production. This has been communicated to the United States by representatives of both countries.

Riyadh is seeking congressional backing for a potential agreement in which Saudi Arabia would recognize Israel and reinstate the defense pact with the United States. Additionally, the deal could involve collaboration in the nuclear sector.

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