Market News & Analysis
WTI and Gold Spike On US Missile Attack At Baghdad Airport
Matt Simpson January 3, 2020 11:08 AM
With Japan still on holiday and no major economic data scheduled in Asia, it looked like we were on track for another quiet session. President Trump had other plans.
Reports of a missile attack at a Baghdad airport hit the screens, with reports that seven pro-Iranian security officials had been killed. An Iraqi militia spokesman confirmed that Iranian Major-General Qassem Soleimani and Iraqi militia commander Abu Mahdi al-Muhandis and then claimed that “Americans and Israelis” were behind the attacks.
US officials and the Pentagon confirmed the US was responsible for the attack, whilst reports surfaced that US Navy Seals had also captured pro-Iran militia commanders in Iraq. And, if that were not enough confirmation, Trump tweeted a picture of the American flag.
As you’d expect, oil prices spiked on supply concerns and at its high had rallied over 4%. Gold also followed suit and hit its highest level since September.
The repercussions from today’s events are yet to be seen but, given the seniority of the leaders killed and detailed, they’re not likely to be small. One pundit was quoted saying “I’m not sure Donald Trump realises what he’s unleashed”, which could be putting it mildly. It’s around 7am in Iran at the time of writing. This leaves plenty of time for developments through the Asia session and beyond, so everyone is being kept on their toes for developments.
Today’s spike has taken WTI break out of its bullish channel and print an intraday high above $64. Yet with prices having retreated below 63.38 resistance, more information may need to come to light before to help decide which side of this key level WTI closes on. If tensions escalate and it appears there will be a squeeze on the oil supply, then we could find prices rebound back above $64 with relative ease. Yet if the response is somehow muted (unlikely at this stage) we could be looking a sharp reversal and for WTI to leave bearish hammer in its wake.
- A break above 64 brings the 66.60 high into focus
- A daily close <= 62 would leave a bearish hammer and signal a bull-trap, and take it back within the 50 – 64 range it was remained within since May
Latest Analysis On Middle East Tensions:
It's Gap Galore Around Middle East Tensions | Gold, SPX, WTI
USD/JPY Holds Support Despite Rise In Geopolitical Tensions
Gold – A Thing of Beauty
OIL MARKET WEEK AHEAD: Iran’s Possible Scenarios
BP In Focus As Oil Price Spikes
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.