Gold prices fell on Monday, reversing course after increased safe-haven demand spurred a series of strong gains, with the focus remaining on any potential spillover from the Israel-Hamas war. Gold witnessed profit-taking after jumping over 5 per cent last week when the Israel-Hamas war sent investors dashing for safe-haven assets. Markets were now watching to see whether the Israel-Hamas conflict would spill over into the Middle East region, as Israel prepares a ground offensive in the Gaza strip.
Global Gold gave up over $10 from nearly 1 month’s high; Spot Gold hovering $1920 an ounce Stronger-than-expected U.S. inflation data released last week pointed to a sustained hawkish stance from the Federal Reserve, which is likely to keep interest rates higher for longer. The dollar is still largely the safe haven of choice. Inflows to the greenback came close to a 10-month peak last week.
Copper prices rose on Monday after coming close to a five-month low in the prior week. Focus this week is squarely on key economic readings from China; third-quarter gross domestic product.
The reading is expected to show that Chinese economic growth weakened further in the prior quarter as business activity showed little signs of improvement despite some stimulus measures.
People’s Bank of China is also expected to decide on its key loan prime rates this week, although a change appears unlikely. Trade data last Friday showed a slump in exports and imports was gradually easing. China’s September copper imports hit an intra-year high, although still lower than last year’s volume. Copper stocks on the LME and SHFE warehouses recorded weekly rises last week Weighing on the market was the dollar movement, hovering close to 106.50 Investors awaited a speech by Federal Reserve Chair Jerome Powell later this week for further clues on US Central Bank’s rate outlook.
Oil traded mostly flat on Monday after surging last week as investors wait to see if the Israel-Hamas conflict draws in other countries – a development that would potentially drive up prices further and deal a fresh blow to the global economy. Brent futures were largely last flat near the $91/barrel mark. Both benchmarks climbed nearly 6 per cent on Friday, posting their highest daily percentage gains since April, as investors priced in the possibility of a wider Middle East conflict. For the week, Brent advanced 7.5 per cent while WTI climbed 5.9 per cent.
The war between Hamas and Israel poses a significant geopolitical risk to oil markets since Russia’s invasion of Ukraine last year, amid concerns about any potential escalation involving Iran.
Market participants are assessing what a wider conflict might imply for supplies from the world’s top oil-producing region, including Saudi Arabia, Iran and the United Arab Emirates.