Gold prices saw an increase while Asian stocks experienced a decline on Monday, driven by escalating geopolitical tensions in the Middle East following Iran's recent attack on Israel. This event led to a surge in demand for safe-haven assets, with gold prices rising as a result.
Oil prices had risen on Friday in anticipation of potential retaliatory actions from Iran, reaching their highest levels since October. However, they slightly retreated during Asian trading hours on Monday as the geopolitical risk premium decreased, with Israeli military officials reporting only minor damage from the attack.
Analysts from ANZ highlighted the impact of the heightened tensions in the Middle East on commodity markets, emphasizing the uncertainty and volatility in the current geopolitical landscape. The attack by Iran has raised concerns about potential disruptions to oil supply, with the reaction of Israel's government expected to play a crucial role in determining the extent of this risk.
Prior to the attack by Iran, US stocks had ended Friday on a notably lower note, reflecting concerns on Wall Street about the escalating tensions in the region. However, US futures showed a cautious uptick following reassurances from US President Joe Biden and his national security team. They communicated the US's stance of not engaging in any counter-strike against Iran, aiming to mitigate the risk of a broader regional conflict.
