2023-10-08
Typically, the Israel-Palestinian conflict hasn't had a significant impact on the markets. However, the current dynamics, especially involving Lebanon, Iran, and other regional players, could potentially alter this landscape.
The Israel-Palestinian conflict's most notable market impact occurred five decades ago during the Yom Kippur War in 1973. During that period, crude oil prices surged from $5 to $50, while gold prices skyrocketed from $44.22 to $875. Stock markets experienced a sharp decline of nearly 50%, eventually stabilizing and ending roughly flat after nearly three years.
Crude oil has been on a rally since mid-2023, but it faced a significant sell-off this week. Notably, despite ongoing efforts by Saudi Arabia and Russia to reduce oil supply, recent developments show the challenges in monopolizing this narrative. While nothing is certain, the odds currently appear to favor the higher crude oil prices.
Lower oil prices would certainly align with the interests of the FED and ECB. Meanwhile, gold prices continue to decline, driven by a strengthening USD and increasing interest rates. It's highly likely that they may surpass the $2,000 mark in the future.
We will see on Monday
Thanks
Finn