FX Careers

General Market Analysis | 16 October 2023

Gold, Oil and Dollar Flying High – Geopolitical Risks Rise

Global financial markets are bracing for increased geopolitical risks this week as Israel looks set to move into Gaza. Gold and Oil prices jumped significantly on Friday as fears climbed that the conflict could escalate in the Middle East. Oil leapt nearly 6% and Gold nearly 4% as it recovered all the ground it lost in the preceding weeks. US stock indices had a mixed day as they continued to react to the stronger CPI print, the Nasdaq was smashed 1.23%, the S&P down 0.50% and the Dow managed a 0.12% climb. The dollar remained bid against most of the majors, but traders are expecting more haven flows in the days ahead.

Gold in Focus for Investors

Gold has experienced huge volatility over the past few weeks. Since September 21st prices have dropped from highs just under $1,950 to just under $1,810 as the dollar climbed alongside US yields before it retraced nearly the whole move in the last week on the back of the conflict in the Middle East. Traders are expecting further volatility over the coming weeks as gold’s safe haven status becomes a major focus for investors. Any further escalation geographically in the Middle East will see further topside risks with a breakthrough of the recent highs likely to open the route back towards $2,000/oz and any strong signs of a resolution leading it to drop swiftly back into the range.

Middle East Tensions in Focus for Investors Today

Investors will be focusing on newswires again today with the possibility of the ground war in Israel starting in earnest leading to further haven flows. There is little on the macroeconomic calendar in either the Asian session or European day ahead, but traders still expect markets to remain volatile. The US session does see some risk events on the calendar with the Empire State Manufacturing Index release due out from the Federal Reserve Bank of New York early in the piece and then the Bank of Canada Business Outlook Survey out north of the border later in the day. We also hear from Philadelphia Fed President Patrick Harper for the first (but certainly not the last) time this week – he’s due to speak on 5 separate occasions.