02/10/2024 Daily Reports
The dollar held its strongest weekly gain on Wednesday as an Iranian missile attack on Israel spurred safe-haven buying, raising concerns about the expanding conflict in the Middle East. Iran’s Revolutionary Guard Corps fired over 180 ballistic missiles at Israel, citing retaliation for Israeli actions in Lebanon against Hezbollah and killings of militant leaders.
Though no injuries were reported, Israel’s ground assault against Hezbollah in Lebanon has heightened fears of further escalation. Market responses have focused on oil prices, with analysts suggesting that Israel’s retaliation could determine the next market moves, particularly concerning Iran’s military and oil industry.
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Gold prices remained steady on Wednesday, holding at $2,659.79 per ounce as a stronger U.S. dollar countered safe-haven demand driven by rising tensions in the Middle East. Israeli Prime Minister Benjamin Netanyahu warned of retaliation against Iran for a missile attack, raising concerns of a broader conflict. Despite a 1% increase in the previous session, gold’s movement is expected to remain volatile as investors await key U.S. economic data, including ADP employment figures and nonfarm payrolls, which could influence future Federal Reserve rate cuts.
The dollar’s strength added pressure on gold, making it more expensive for non-dollar holders. Traders are closely watching for any surprises in upcoming economic reports, which could impact expectations of aggressive Fed easing. Meanwhile, physical demand for gold has declined in key markets due to high prices.
Oil Extends Surge as Israel Vows Retaliation After Iran Strike
Oil rose for a second day after Iran fired about 200 ballistic missiles at Israel, drawing a vow of retaliation from Prime Minister Benjamin Netanyahu and raising the risks to crude supplies from the region.
Global benchmark Brent climbed toward $75 a barrel, after briefly spiking more than 5% on Tuesday following the Iranian assault, which was preceded by a warning from the US. West Texas Intermediate advanced above $71, although it also remained below the previous session’s peak.
Crude’s advance reflects investors pricing in a renewed risk premium for the world’s most important commodity, given the Middle East accounts for about a third of global supplies. Haven assets, including bonds, gold and the US dollar, also climbed on the latest escalation of the conflict.
Although Israel and Iran have been facing off since the outbreak of the war in Gaza against Tehran-backed Hamas almost a year ago, previous spikes have been short-lived in the absence of actual interruptions to oil output. Iran pumped about 3.4 million barrels a day in August, according to OPEC.
