On Wednesday, gold and oil prices surged as reports emerged of Israel’s preparations for a potential invasion of Gaza.
The surge followed a televised speech by Israeli Prime Minister Netanyahu, in which he announced the country’s army’s readiness to enter Gaza, although no specific timetable or details were provided.
US Treasury yields also rose, with the 10-year bond nearing 5% for the third time in a week. The strength of the US dollar caused the Australian dollar to lose its gains from Wednesday, following slightly higher inflation data.
The Australian dollar dropped to just over 63 US cents after 7 am on Thursday, Sydney time, having peaked just under 64 cents overnight. It continued to slide throughout Thursday morning.
In New York, Comex gold futures reached their highest level in almost three months, while US crude futures also saw significant gains. Gold for December delivery closed up $8.80 at $1,994.90 per ounce, its highest since July 31. The Australian dollar rose to over $A3.130 an ounce that morning.
The US dollar’s rise made gold more expensive for international buyers, as reflected by the ICE dollar index, which increased by 0.22 points to 106.49.
Despite climbing Treasury yields, usually bearish for gold and oil, the prevailing fears appeared to override their impact. The US two-year note was up 4.1 basis points at around 5.108%, while the yield on the 10-year bond increased by 12.8 points to 4.96%.
West Texas Intermediate (WTI) crude oil also closed higher on Wednesday, with traders reacting to Prime Minister Benjamin Netanyahu’s announcement regarding Israeli defense forces’ Gaza invasion preparations.
WTI crude oil for December delivery closed up $1.65 at $85.39 per barrel, and December Brent crude, the global benchmark, closed up $2.06 at US$90.13.
Singapore quoted iron ore futures edged up by approximately $1.30 per tonne to $117.35, and Australian premium coking coal futures increased by 50 cents to $2,320 per tonne. Meanwhile, Comex copper futures fell by 1% to just over $3.58 per pound.