Oil climbs over the $50 mark and gold becomes safe haven from U.S bourses.
On Thursday morning markets reacted to Saudi Arabia launching an air attack on anti-government Houthi fighters in the Yemen followed closely by a retaliation attack on the Kingdom. This action is seen in the markets as a risk to oil supplies from the region and so oil prices surged to $52.45 per barrel.
Gold also made gains as a ‘safe haven’, lifting from 1194.93 opening price to a high of 1219.33. Much of gold’s gains were also attributed to the retreat from U.S bourses that had seen major gains this week but sank on Wednesday’s trading. USTECH100 [Nasdaq] fell 2.4%, USA500 [S&P500] lost 31 points, whilst the Financial Times reports that, ‘US index futures suggest the S&P 500 will dip 15 points to 2,046 when New York’s starting bell rings.’
Though gold is usually linked to the U.S dollar, which is currently deflating, investors on Thursday sought the metal as a safe haven, and at current prices last seen in 2010, the commodity is a bargain if it maintains its upward course that started on 18 March this month.
Outbreaks of military tension in the Middle East and the poor U.S data reported this week are two of the factors effecting stocks and commodity markets, whilst forthcoming company earnings for the next quarter are due soon and do not bode well for many U.S firms due to the disadvantageous foreign currency rate on the strength of the greenback.
Though the U.S dollar has lost in the last week to a basket of currencies, the Federal Reserve Bank showed little sign of reprieve for U.S companies with most analysts interpreting the latest FED announcement on the U.S economy as dovish with predictions that markets will not see interest rates changing until at least September this year.
MT4 chart: Oil
MT4 chart: AUXUSD Gold
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