Gold and oil fell slightly on Monday, after Western powers launched a missile attack on Syria. However, stocks are unlikely to suffer significant losses, unless the West hits again or Russia takes retaliatory action. According to market analysts, there is a good indicator for the markets that must be taken into account — the fact that the Western powers put in a lot of attention to not hit any Russian targets.
Gold has seen gains recently, as a safe haven in the midst of a US-China trade dispute and an escalating conflict in Syria, which has also pushed oil above $70 a barrel, on fears of rising tensions in the Middle East. Global stocks fell last week but ended the week with the best weekly gain in more than a month, as investors expected earning reports from US companies to be optimistic.
Despite the growing geopolitical risks, the so-called safe haven assets were short-lived and modest. While the yen initially rose on fears of a Syrian strike, it closed at a seven-week low against the dollar last week.
On Saturday, US, French and British missiles hit targets in Syria containing chemical weapons in response to a poison gas attack a week ago. The attack, condemned by Damascus and its allies, is the biggest intervention by Western countries against the Assad regime and its powerful ally, Russia. However, the three countries said the strikes were limited to targeting Syria’s chemical weapons capabilities, and not to overthrow Assad or interfere in the civil war.
According to market analysts, gold was expected to make gains in trading on Monday, but the rise will not be too sharp as the focus will be on the counter-reaction by Russia. Gold, traditionally used as a store of value in times of political and economic uncertainty, could rise to $1,400 an ounce after two consecutive weeks of gains.
Tokyo will be the first major market to open on Monday, and the yen is likely to climb against the dollar, but not outside the range of 106.50 yen per dollar.