Gold Price Falls, Brent Oil Hits $80 on 1st Anniversary of Hamas' 7th October Attack on Israel
Monday, 10/07/2024 15:01
GOLD PRICES pared an earlier gain on Monday, the first anniversary of Hamas' atrocities in southern Israel spurring 12 months of war, but crude oil hit multi-week highs alongside the Dollar and US bond yields as traders slashed their betting on steep cuts to US interest rates at the Federal Reserve's last 2 meetings of 2024,
writes Atsuko Whitehouse at BullionVault.
Having peaked near $2660 per Troy ounce overnight – 1.0% below late September's new record high – spot gold fell towards $2640 per ounce but held nearly $10 above Friday's low, when
strong US jobs data erased all bets on a half-point rate cut from the Fed's next decision.
According to the CME derivatives exchange's FedWatch tool, those bets
had put the odds of a half-point November cut at 1-in-3 only this time last week.
"Gold is caught between Middle East escalation and a healthy-looking US labour market," says Rhona O'Connell, senior precious metals analyst at brokerage Stone X Group Inc.
The oil market, in contrast, "was
too comfortable overlooking geopolitical risks," says an analyst to the
Financial Times after European benchmark Brent jumped by nearly 10% last week, rising to fresh 9-week highs Monday amid worsening fears and threats of further escalation in the Middle East
after Iran fired missiles at Israel.
Since the
deadly terror attack on Israel by Iran-backed Hamas gunmen on 7th October 2023 – killing approximately 1,200 people and taking 251 hostages – Brent crude oil has still fallen by 10.4% as concerns over potential supply disruptions in the Middle East were overwhelmed by robust supply and sluggish demand, particularly in world No.2 economy China.
Spot gold prices, in contrast, have risen by 43.0%.
"Geopolitical risks in the Middle East could support safe-haven flows for the yellow metal, which
limit the downside from a less-dovish market rate pricing," says an analyst to Reuters.
With Brent briefly touching $80 per barrel today, "Oil prices
would spike by $10 to $20 if an Israeli strike knocks out 1 million barrels per day of Iranian production over a sustained period," reckons Daan Struyven, chief oil analyst at US investment bank Goldman Sachs.
Despite Tel Aviv's key ally the USA having made clear that Washington opposes a strike on Iranian nuclear facilities, Israel's defence minister,
Yoav Gallant said on Sunday that "everything is on the table" as the IDF looked poised to expand its ground incursion into southern Lebanon on the first anniversary of the Hamas attack, carrying out fresh strikes on a Hezbollah stronghold suburb on Sunday while the Tehran-backed militia fired rockets at Haifa, Israel's third-largest city, early on Monday.
The Dollar Index, a measure of the US currency's value against its major peers, meantime steadied today after 5 consecutive days of gains, reaching a 7-week high.
Ten-year US Treasury yields – a benchmark for government, finance, and commercial borrowing costs – rose to the highest in 9 weeks, surpassing 4.0% per annum.
European stock markets reversed earlier losses on the pan-European Stoxx 600 index Monday lunch time, despite bond yields rising across the continent, with the German 10-year bond yield trading at its highest in a month even though new data said factories in the Eurozone's No.1 economy recorded their sharpest drop in new orders for 7 months in August.
Gold prices in Euro and British Pound terms pared their earlier gains to €2405 and £2019 respectively after hitting new all-time highs of €2414 and £2021 on Friday at London's afternoon benchmarking auction.
The
price of silver bullion, which derives nearly 60% of its annual demand from industrial uses, fell 1.6% to $31.54 after spiking to a 12-year high of $32.95 in the previous trading session.
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