Gold, oil retreat on less-than-feared weekend tensions, upside risks prevail | MarketTalk: What’s up today? | Swissquote

Show notes

Risk sentiment is improved compared to Friday as tensions in the Middle East didn’t escalate as much as feared during the weekend.
The market has been reacting to the news mainly by seeking safety in gold. Gold spiked to $1997 per ounce on Friday on fears that tensions would further escalate in the Middle East. Upside risks prevail but that as soon as tensions in the Middle East stabilize, gold will come under a decent selling pressure as the US 10-year yield flirts with the 5% level, as the US 30-year paper now yields above 5%. The opportunity cost of holding the non-interest bearing gold has significantly increased since the start of the war in Gaza as the negative correlation between the US yields and gold clearly broke, and turned positive.
Elsewhere, the US dollar index has been stagnating since its October 3rd peak. The EURUSD tested the 1.06 offers last week, despite weakening European Central Bank (ECB) expectations. The barrel of US crude traded past the $91pb level on Friday but smashed back below the $88pb this morning as tensions in the Middle East remained softer than what investors feared into the weekend. But upside risks prevail. The S&P500 closed last week more than 2.5% lower and below its 200-DMA on the back of limited risk appetite due to geopolitical tensions. Amazon, Microsoft, Meta, Intel, Exxon Mobil and Chevron are among companies that will report earnings throughout this week.
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