Gold Outshines Risk Assets Following Iran Oil Tanker Attack

October 14, 2019 17:35 UTC

The price of gold rose along with other haven assets on Monday, as demand for stocks waned amid fears of another flare-up in the Middle East.

Gold Avoids Brush With Monthly Low

Futures on December gold deliveries reached a session high of $1,501.50 a troy ounce on the Comex division of the New York Mercantile Exchange. The yellow metal now sits just below $1,497 an ounce, having gained 0.5%.

Gold futures return to $1,500 an ounce, avoiding a harder fall back toward monthly lows. | Chart: bloomberg.com

Silver futures also rallied at the start of the week, with the December contract climbing 1% to $17.71 an ounce.

The gold-silver ratio used by investors to determine when to buy and sell precious metals declined 0.5% to 84.35. That’s 84.35 ounces of silver to buy one ounce of gold.

Iranian Oil Tanker Suffers Missile Attack

Stocks were under pressure Monday amid reports that an Iranian oil tanker was attacked in the Red Sea, a narrow strip of water separating Africa and the Arabian Gulf.

Tehran says it was hit last week by two missiles off the coast of Saudi Arabia. On Sunday, images of the attack showing two gaping holes in the Iranian oil tanker were released.

Sabiti, an Iranian-owned oil tanker, was allegedly hit with two missiles off the coast of Saudi Arabia. | Image: WANA (West Asia News Agency) via Reuters.

Iran and Saudi Arabia are regional adversaries backing opposing sides in Syria, Yemen and Lebanon. The Saudis have been trying to contain Iran’s growing sphere of influence in the region and have accused the Islamic Republic of orchestrating drone attacks on the kingdom’s oil facilities. Yemen’s Houthi rebels, who are allegedly backed by Iran, claimed responsibility for the attacks that knocked out millions of barrels of Saudi production capacity.

Iranian President Hassan Rouhani threatened retaliation but didn’t address any specific perpetrators. He said:

“If a country thinks that it can create instability in the region without getting a response, that would be a sheer mistake.”

The United States announced last week that it will send roughly 1,800 army personnel along with dozens of fighter jets to help protect the Saudis.

Mid-east tensions failed to lift oil prices on Monday amid concerns over energy demand. U.S. West Texas Intermediate (WTI) futures fell 2.7% to $53.22 a barrel on the New York Mercantile Exchange. Brent crude, the international futures benchmark, declined 2.8% to $58.81 a barrel.

This article was edited by Josiah Wilmoth.

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@hsbourgi

Financial Editor to CCN Markets, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi. Sam is based in Ontario, Canada and can be contacted at sam.bourgi@ccn.com