Safe Haven Assets Back in the Spotlight: Oil, Gold and USD Prices Soar Amid Middle East Clashes

As ongoing conflict between Israel and Hamas escalates, markets are swiftly reacting, with notable rises observed in Gold, Oil, and dollar at the beginning of the week.

Oil traders were focused on Iran as the Wall Street Journal reported that Iranian security officials helped Hamas plan the attack. Global benchmark Brent and West Texas Intermediate futures traded over 4% Monday.

The rising price of oil is linked to concerns that potential US sanctions against Iran could disrupt the free flow of global oil supplies, considering Iran's significant role as an oil producer.

"Historical analysis suggests that oil prices tend to experience sustained gains after the Middle East crises," said Stephen Innes, managing director at SPI Asset Management.

Gold gained as much as 1.2% Monday, as financial markets brace for volatility from the shock attack by Hamas.

"Gains due to geopolitical tensions are not expected to last long. What will remain decisive for gold's performance in the medium and long term will be U.S. yields. For now, they are on the upside," said Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank.

The greenback — seen as a haven in times of trouble — advanced 0.3% versus the euro and pound, while risk currencies such as the Aussie and kiwi weakened.

"The path of least resistance over the very short term is dollar strength on lower risk appetite," said Jason Wong, a currency strategist at Bank of New Zealand. But given the scope of the rally in the dollar, "there's a reasonable chance it fizzles out relatively quickly," he said.