Oil futures saw a reversal in their declining trend, while gold prices surged on Wednesday following an overnight escalation of hostilities in the Middle East. The spike in prices came after reports of the alleged killing of Hamas' political leader in Tehran, Iran.
The incident occurred when Ismail Haniyeh, Hamas' political leader, was reportedly killed in an air strike in the early hours of Wednesday. Both Hamas and Iran have accused Israel of being behind the attack, leading to heightened tensions in the region.
Following this event, Brent futures spiked by over 2% in Asian and European trading, after hitting a seven-week low the previous day. Brent Crude September contract was up 2.39% to $80.51 per barrel, while West Texas Intermediate traded at $76.73 per barrel, up 2.68%.
The attacks on senior Iran-backed militant leaders have raised concerns about further regional conflict, causing a jump in oil prices. The situation has also cast doubt on ceasefire talks between Hamas and Israel, with fears of escalating violence.
Despite the tensions, no oil and gas infrastructure has been targeted so far. However, the ongoing conflict has led to a rise in oil prices due to market uncertainties and geopolitical risks.
Investors seeking safety amid the turmoil turned to gold, with prices rising in response to the geopolitical tensions. Gold prices in Dubai and Comex Gold futures both saw an increase, as the precious metal is often considered a safe haven during times of uncertainty.
Geopolitical tensions, along with other factors such as expected interest rate cuts and inflation, have contributed to the bullish case for gold. JPMorgan predicts that gold prices may average $2,500 per troy ounce in the fourth quarter of 2024.
The recent events in the Middle East have reignited concerns about global stability, prompting investors to turn to safe-haven assets like gold. The situation remains fluid, with international pleas for calm amidst escalating tensions in the region.
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