Gold prices rose on Monday due to rising geopolitical tensions in the Middle East following an attack by Iran on Israel, causing demand for safe-haven investments to increase. Asian stocks, including Japan’s Nikkei 225 and South Korea’s Kospi, fell more than 1%, while Hong Kong’s Hang Seng Index dropped 0.8%. However, China’s Shanghai Composite Index rose 1.2% in morning trade. Spot gold reached $2,358 per ounce, up 0.6%, after hitting an all-time high of $2,431 on Friday. US gold futures also increased by 0.1% on Monday, with a 15% rise so far this year.
Oil prices had settled higher on Friday in anticipation of retaliatory action from Iran, causing them to retreat slightly during Asian trading hours on Monday. Despite minor damage from the attack, US crude futures have risen 6.7% this year, while Brent crude, the global oil benchmark, has surged over 10%. Analysts from ANZ mentioned in a research report that the heightened tensions in the Middle East amid a worsening geopolitical backdrop kept commodity markets on edge, with concerns about potential disruption to oil supply.
The attack by Iran towards Israel late Saturday raised concerns about a possible disruption to oil supply, with analysts mentioning that the risk could be determined by Israel’s government reaction. The Middle East faced uncertainties after Iran’s missile attack, which came after a suspected Israeli strike on an Iranian diplomatic complex in Syria earlier in the month. US stocks declined sharply on Friday due to concerns about escalating tensions in the region, but US futures showed cautious optimism on Monday as President Joe Biden assured that the US will not participate in any counter-strike against Iran, in an attempt to prevent a wider regional conflict.
Iran’s attack on Israel resulted in an increase in gold prices amid rising geopolitical tensions, with Asian stocks mostly falling on Monday. The attack, following recent suspected strikes in Syria, raised concerns about potential oil supply disruption, leading to higher oil prices. US stocks experienced a decline on Friday due to the Middle East tensions, but US futures showed slight improvements on Monday after reassurance from President Biden’s administration. The situation in the Middle East remains uncertain, with the reaction of Israel’s government expected to influence the level of risk in the region. Gold and oil continue to be closely monitored for any further developments impacting global markets.
