Gold Rises Above $1,800 Amid Israel-Hamas War
Gold’s Response to the Israel-Hamas War
Gold settled above the mid $1,800 level on Monday as the Israel-Hamas war unfolded. However, analysts suggest that the rally in the safe-haven asset will depend on the extent of the crisis and its impact on oil and global markets.
Gold’s Performance on New York’s Comex
Gold’s most-active contract on New York’s Comex, December, closed up $19.10, or 1%, at $1,864.30 per ounce. The contract later reached $1,875.85 after hitting a session high of $1,875.85 at 15:30 ET (19:30 GMT). The spot price, which is closely watched by some traders, stood at $1,861.51, up $28.92, or 1.6%, for the day with a session peak of $1,862.26.
The Impact on Oil and Gold Markets
As the Hamas rockets continued to strike Tel Aviv, Israel’s largest city, and Prime Minister Benjamin Netanyahu vowed to “change the Middle East” through the country’s war against the Palestine militant group, traders monitoring oil and gold markets tried to assess the immediate consequences of the crisis.
Concerns About Iranian Oil Supply
Attention was particularly focused on the potential impact on Iranian oil supply. Iran is not only the fifth largest crude exporter globally but also a vocal supporter of the Palestinian cause and often instigates conflicts in the Middle East.
Expert’s Analysis on the Crisis
John Kilduff, a partner at New York energy hedge fund Again Capital, compared the crisis to a “reset” that could potentially have a significant impact on both oil and gold prices. However, the actual effect on oil supply, especially in terms of production and exports, will determine the magnitude of the price increase. Kilduff emphasized the need to consider the number of affected barrels and how they align with the already constrained global oil supply resulting from OPEC+ output cuts.
Factors Influencing Gold’s Price
Kilduff also highlighted the importance of understanding the role of Iran in the conflict and its potential impact on oil shipments. If Israel’s war against Hamas severely disrupts Iran’s oil exports, coupled with increased sanctions enforcement by the United States, the price of oil could remain high. However, without sustained high oil prices, gold may face challenges in reaching new highs, despite its supposed reflection of geopolitical tensions.
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