Oil, Gold & Cryptocurrency Surge Post Vexed Killing of Qasem Soleimani
As tensions hike in the Middle East post the killing of Iranian General Qasem Soleimani, Asian share markets reflected shaking statistics on Jan 6. Reports show, gold rose to reach seven years high and oil flirted with four-month peaks.
US President Donald Trump warned that the country would strike back possibly in a disproportionate manner, in case Iran attacks any American person or target. After the killing of Gen. Qasem Soleimani by a US drone strike, Iraq’s parliament on January 5 recommended all foreign troops to be out of the country.
Sources have reported hiking gold prices at 1.6 percent to US$1,575.37 per ounce in jittery trade. Analysts have expressed scepticism about a further rise in oil prices, in near future, if the US-Iran conflict hampers global supplies.
Records claim Brent crude futures upswing US$1.05 to US$69.65 a barrel, while US crude climbed 94 cents to US$63.99. Although most major indices were yet to open, the broadest index of Asia-Pacific shares outside Japan was off 0.16 percent. Futures for Japan’s Nikkei pointed to an opening fall of around 500 points.
Representing a choppy trade, E-Mini futures for the S&P 500 dropped 0.4 percent. Sovereign bonds gained from the safety bid with yields on 10-year Treasuries down at 1.795 percent having plunged 10 basis points on January 3. Treasury futures benefited 7 ticks.
With regards to Gold, Senior Resource Analyst at MineLife Pty in Sydney said in an email, “Gold has entered 2020 with strong momentum. When you factor in ongoing uncertainty with respect to US-China trade talks and heightened security issues with Iran, gold really is a no-brainer.” Palladium gains have also met all time high.
After Qasem Soleimani’s killing, Gold miners traded higher. The largest producer of Australia, Newcrest Mining Ltd, rose to 3.1 percent in Sydney trading, while Northern Star Resources Ltd gained 1.7 percent and Evolution Mining Ltd advanced as much as 4.1 percent.
Speaking of the heightened risk that markets would be subjected to in case US-Iran conflict aggravates, Chief Oil Analyst at Energy Aspects, Amrita Sen said, “Iraq is potentially the geopolitical flashpoint for 2020.” She added, “If Iraq does become the scene of escalating conflict between Tehran and Washington, you can imagine, then, that the fields could be at risk.” This, in turn, would lead to a much higher surge in prices.
As per an analyst at an investment bank, RBC Capital Markets, Helima Croft, “the aggravated war after the killing of Qasem Soleimani will impact the US oil companies operating in Iraq (like Exxon Mobil).” Post regular monitoring of the situation, Julie King, a company spokeswoman said in an email, “Exxon Mobil has programmes and measures in place to provide security to protect its people, operations and facilities.”
Writing to her clients on January 2, Croft said, “With trade wars receding, the heightened tensions in the Middle East may be poised to make a more meaningful impact on the oil market in 2020.”
Following the line of hiking gold and oil prices are the digital currency prices. A leading cryptocurrency having like attributes to gold, Bitcoin rose by five percent to about US$7,413 (RM30,411) at 1am on Saturday from the week’s low of US$6,850.
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