Pound, gold and oil prices in focus: commodity and currency check
Pound (GBPUSD=X)
Sterling lost ground against the dollar as Iran's missile attack on Israel pushed investors into safe assets as geopolitical tensions rise.
The pound was trading at $1.3289 at the time of writing, down 0.1%, erasing earlier gains as investors around the world weighed the risk of threats to energy supplies an supply chains after the missile attack threatened to escalate the Middle East conflict.
"The rapid escalation in Middle East tensions sent oil higher and high-beta currencies lower against USD," said Francesco Pesole, FX strategist at ING Bank.
Iran launched over 200 ballistic missiles at Israel on Tuesday, shortly after the US had warned that a strike was imminent. The Israel Defense Forces reported that several of the missiles were intercepted as prime minister Benjamin Netanyahu vowed that Iran "will pay for it".
Chris Weston, head of research at Pepperstone, said: "In the chain of potential market volatility shocks, geopolitics will typically trump economics, corporate earnings, or a central bank response — largely because most market players are poor at pricing risk around these events.
"While these events typically reconcile in a market positive fashion, the tail risk it can throw up is clearly significant.The situation remains fluid, and the slightest calming or increased aggression in the rhetoric from Israel or Iran could result in a sizeable impact on sentiment in markets."
Against the euro, the pound (GBPEUR=X) was basically flat, up by less than 0.1% to €1.2006, at the time of writing.
Gold (GC=F)
Spot gold eased to $2,655 per ounce at the time of writing after hitting $2,670 during Iran's missile attack on Israel. The safe haven asset has been somewhat volatile, having recently touched an all-time high before dropping to $2,630 at the start of the week.
However, overall the prices show that investors are rushing towards the commodity amid geopolitical tensions and the prospect of more interest rate cuts in the US.
Gold futures were even higher, despite a slight dip, trading at $2,675 at the time of writing.
Gold is used as a safe investment during times of political and financial uncertainty.
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"It's instinctive safe-haven buying but unless an Iranian missile gets through and does serious damage in Israel it may be similar to the April attack with similar ordnance that was almost completely intercepted," Tai Wong, a New York-based independent metals trader, told Reuters.
Oil (BZ=F)
Oil prices have jumped as investors await Israel's response to the Iran missile attacks. At the time of writing, Brent crude rose by 2.2% to $75.16 per barrel, while the US West Texas Intermediate (CL=F) climbed 2.4% to $71.51.
"If Iran — which produces around 3 million barrels per day — gets seriously involved in the conflict, we could see the price of a barrel remain under positive pressure for a prolonged period," Ipek Ozkardeskaya, market analyst at Swissquote Bank, said.
"This being said, the geopolitical tensions have a limited impact in the medium to long run price trends, and the gains on the back of tensions should be given back with de-escalation and/or as the market gets used to the headlines and divert focus to something else."
Meanwhile, the FTSE 100 (^FTSE) opened in the green, up by 0.5%. For more details check our live coverage here.
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