Gold rises, oil choppy as Middle East conflict simmers

ISLAMABAD: After the retaliation by Iran on April 13, Pakistan’s equity market ended Monday on a positive note with a mild gain of 0.33 per cent. The positive note was due to emerging thought that the conflict would be contained with no further escalation.

The thought was backed by Tehran’s statement that now the conflict with Israel should be deemed as concluded, said an eminent economist Dr Khaqan Najeeb while talking to The News.

“However, in case the tension escalates due to any further retaliation by Israel against Iran, it could have an adverse impact on oil prices and other commodities. The global stock markets and bonds remain wary of the geo-political risks.”

Iran launched a massive drone and missile attack on April 13 in retaliation for the bombing of the Iranian Embassy by Israel in Syria. The US made it clear on Sunday that it would not be part of any retaliatory attack on Iran, though Israeli Prime Minister Benjamin Netanyahu said it would go ahead with its plans to attack Iran.

Dr Najeeb said that keeping in view the statements from Iran and the US, it can be hoped that Iran-Israel tension will be contained. And if it does not spread, the current situation will have no big impact on the world economies as well Pakistan. The United Nations Security Council met and ended on Sunday with diplomats urging restraint by all parties to prevent conflict in the region from escalating tension.

Brent went up to $91 per barrel soon after the Iranian attack, which later came down to over $89 per barrel. The economist hoped that Pakistan stock market might react positively from Tuesday (today) because of positive vibes coming out of the ongoing high-powered delegation’s visit from the KSA.

Pakistan would also get last tranche of $1.1 billion from the IMF under the Stand-By Arrangement (SBA) loan programme soon. “So the country’s reserves will be hovering around $8 billion.”

“The KSA is expected to invest in mines and mineral, agriculture IT and is also likely to increase its deposits in Pakistan’s central bank to $5 billion from existing $3 billion. This will help strengthen Pakistan’s foreign exchange reserves and send a positive signal to Pakistan’s bonds and equity markets in the days to come.”

Dr Khaqan said that soon after the attack on Israel the global equities had turned negative, but recovered some of the losses and traded in the positive territory on Monday.

However, according to one of the mainstream local media channels, on Monday, the gold rates in Pakistan took a reversal, moving the cost of 24-karat gold to Rs247,300 per tola after seeing a price rise of Rs800. Dealers reported a similar rise in the price of 10 grams of 24-karat gold, which has gone up by Rs686 to now trade at Rs212,020. Furthermore, the price of 10 grams of 22-karat gold also showed a surge to trade at Rs194,351.

As per Reuters, most stock markets in the Gulf ended lower on Sunday after Iran launched a retaliatory attack on Israel that raised the threat of a wider regional conflict.

Saudi Arabia’s benchmark index finished 0.3pc lower, after falling about 2pc during the session, with the country’s biggest lender Saudi National Bank tumbling 3.3pc.

In Qatar, which was also closed for Eid last week, the benchmark stock index fell 0.8pc, as most of its constituents were in negative territory including Qatar National Bank which was down 1.2pc.

On Monday, the Indian stock market tanked over 1pc at open with benchmarks Sensex and Nifty plunging over 900 points and over 250 points, respectively, after military tensions in West Asia sent ripples across financial markets. Cautious investors indulged in sell-offs across sectors in the Indian equity space, helping the gold. Due to its safe-haven status, the precious metal has attracted investors in the wake of the Iran-Israel war.

According to CNN, gold prices in the USA reached new heights as geopolitical tensions deepen in the Middle East. And oil prices fell slightly.