Gold dips as Israel’s limited strike on Iran curbs haven demand; oil slumps
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Gold has surged by more than 30 per cent in 2024, peaking at an all-time high of US$2,758.49 last week.
PHOTO: REUTERS
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NEW YORK – Gold edged lower from near record-high levels after Israeli strikes on Iran over the weekend appeared to be more restrained than many expected.
Bullion traded lower on Oct 28 after Israeli planes struck military targets across Iran on Oct 26,
Tehran did not immediately vow to respond, with the latest developments possibly reducing some haven demand.
Gold has surged by more than 30 per cent in 2024, peaking at an all-time high of US$2,758.49 last week. The rally intensified in recent months due to geopolitical tensions in the Middle East, while traders are assessing risks from the upcoming US presidential election.
Money managers have also played their part, with hedge funds raising net-long positions in gold and investors adding to exchange-traded fund holdings.
Oil also fell, tumbling more than 5 per cent in early Asian trading after the Israeli strikes on Iran avoided The Organisation of the Petroleum Exporting Countries (Opec) member’s crude facilities, raising the prospect for easing hostilities in the region.
Brent slumped below US$73 a barrel and West Texas Intermediate sunk near US$68 on Oct 28.
Iranian state media said the country’s oil industry activities were working normally.
Iran’s missile attack on Oct 1 restored a war premium on oil, but the limited response from Israel is likely to refocus market attention on plentiful supply and concerns over Chinese demand.
Profits at the nation’s industrial firms over the weekend highlighted the weak outlook for the world’s biggest crude importer, despite recent government stimulus.
Israel’s “retaliation on Oct 26 was mostly viewed as underwhelming and proportionate”, said Mr Harry Tchilinguirian, group head of research at Onyx Capital Group. “Poor macroeconomic realities centred around China will take over the narrative again to push the oil price lower.”
Opec+ plans to start gradually reviving oil production in December, and the market is watching for any change to that timeline. The producer group is scheduled to meet on Dec 1 to consider output policy for 2025.
Market metrics, however, still show traders remain on edge.
A gauge of implied volatility for Brent is hovering near the highest in a year, and options are still retaining their bullish hue with calls – which profits buyers when prices rise – keeping their premium over the opposite puts.
Higher-than-usual volumes of Brent contracts changed hands during trading in Asia.
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