LONDON (Reuters) – Investors snapped up traditional safe-haven assets on Tuesday, sending gold briefly to a new record high, after the Israeli military said it carried out an attack on Hamas leadership in Qatar, marking an escalation of the conflict in the region.
The Japanese yen held on to the day’s gains, while the price of oil jumped by around $1 to $67 a barrel .
COMMENTS:
JANE FOLEY, HEAD OF FX STRATEGY, RABOBANK, LONDON:
“It’s difficult at this stage for the markets to examine this particular geopolitical risk in the context of the risk that is already on the table. Clearly there is a possibility that there is an escalation but I think the market will be fairly cautious about making that assumption until more details are known.”
MICHAEL BROWN, SENIOR RESEARCH STRATEGIST, PEPPERSTONE, LONDON:
“The immediate reaction of a spike in crude benchmarks and some further upside in spot gold makes considerable sense.”
“It seems unlikely that there will be any significant retaliation from the strikes, especially amid reporting that the U.S. gave their backing for them to take place, while Qatar’s immediate response gives no indication that they are seeking to retaliate, or escalate tensions further.”
“I’d expect the rally in crude to fade relatively rapidly, as we’ve tended to see with geopolitically-induced gains over the last few months, as focus the dust settles, calmer heads prevail, and focus returns to the fundamentals of an already-oversupplied market, into which OPEC+ are adding even more barrels from the start of next month.”
CARLO FRANCHINI, HEAD OF INSTITUTIONAL CLIENTS, BANCA IFIGEST, MILAN:
“Targeting countries that are trying to mediate is far from ideal at this moment. Stock markets aren’t reacting much, but gold is: it’s at an all-time high. Things appear to be taking a turn for the worse.
(Reporting by EMEA Markets Team; Editing by Libby George)
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