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Commodities: Gold, crude up after US missiles hit 'chemical weapons' airbase in Syria

By Andrew Schonberg

Date: Friday 07 Apr 2017

Commodities: Gold, crude up after US missiles hit 'chemical weapons' airbase in Syria

(ShareCast News) - Gold sprinted higher early on Friday and held its ground as investors scurried for the defensive asset on news of a targeted US missile strike on an airbase in Syria apparently used for a chemical weapons attack on a rebel-held town.
News of a deadly truck terror attack in Stockholm, Sweden, mid afternoon also caused the yellow metal to flutter again. Details of this attack and its fatalities -- so far estimated as at least three -- were emerging.

These events -- the US missile strike drawing criticism from Russia -- overshadowed the summit between US President Donald Trump and China President Xi Jinping in Florida.

At about 15:22 GMT, on Comex, gold was up 1.16% to 1267.90 an ounce. Silver rose 0.65% to $18.37 an ounce, and copper fell 1.37% to 262.15 cents a pound.

"The precious metal is having one of its best days and a lot of tail winds is mainly driven by the political instability," said Naeem Aslam, chief market analyst at Think Markets UK.

"Investors are concerned if the current situation could be contained or not and what the reaction of Russia would be given that Russian helicopters were at the hangar when the US attacked the Syrian airbase," said Aslam.

FXTM research analyst Lukman Otunuga added that with risk aversion set to heighten as markets pondered the ramifications of the US airstrike, safe-haven assets might receive a solid boost.

"From a technical standpoint, bulls need a solid daily close above $1260 for a further incline higher towards $1300," said Otunuga.

Mike van Dulken, head of research at Accendo Markets observed that nil-yielding gold was off its best levels on Friday, but still holding a $1260 breakout.

"No stranger to conflict, this is nonetheless military, not politics or twitter."

Three-month industrial metals on London Metals Exchange were mostly lower. Zinc fell 1.87%, copper lost 0.63%, aluminum slipped 0.41% and tin rose 1.09%.

At about 15:22 GMT, Nymex-priced WTI crude was up 0.77% to $52.10 a barrel, while Intercontinental Exchange-traded Brent was 0.56% up to $55.20 a barrel.

Aslam of Think Markets UK, said the "black gold" had become a favorite trade for investors on the back of US strike on Syria.

"The attack is bringing a major threat to oil production, given that Russia holds a major prominent position on the ground in the Middle East," he said.

"We think that the target of $54-$55 (for WTI) could be achieved in the coming weeks if this situation escalates further."

Otunuga at FXTM noted the bullish appearance of WTI's price rise on Friday, but cautioned its bearish fundamentals remained intact.

"With the oversupply concerns still a dominant theme in the oil markets, extreme upside gains may be limited," he said.

"For the upside to continue and display sustainability, a solid breakout and daily close above $53 (for WTI) will be needed. In an alternative scenario, bears have a chance to reclaiming control back below $51."

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