Gold and Oil Gap Higher on Middle East Conflict
14:33, 9 October 2023
Oil Prices Surge Amidst Middle East Unrest
While Israel itself is not a major oil producer, there are worries that the conflict in the Middle East could lead to tougher enforcement of sanctions on oil from Iran, a nation that has supported Hamas.
Additionally, the conflict could complicate efforts by the U.S. to normalise relations between Saudi Arabia and Israel. This, in turn, might affect Saudi Arabia's willingness to increase its oil output.
Brent crude, the international benchmark has gapped back above the volume-weighted average price (VWAP) from the June swing lows and briefly flirted with the 50 Day Moving Average (see chart below).
Brent Crude Daily Candle Chart
Gold Prices Reflect Safe-Haven Demand
Gold, often viewed as a safe-haven asset, has also gapped higher this morning, driven by growing concerns over geopolitical tensions.
The precious metal's price has surged as investors seek refuge from uncertainty and global instability. Geopolitical conflicts, such as the one in the Middle East, often drive investors toward safe-haven assets like gold.
On the price chart (below), we can see that this morning’s bullish gap has followed Friday’s bounce from key support. Prices are now within touching distance of the VWAP anchored to the September swing highs and this is an area which may provide resistance moving forward.
Gold Spot Price Daily Candle Chart