The market has been shaken by another unfortunate Middle East in-fighting. Israel launched an attack in Gaza, dubbed Operation “Pillar of Defense”, which led to the killing of Ahmed Al-Jaabari, a key military commander of the purported Palestinian terrorist group Hamas. The assassination of Al-Jaabari was swiftly followed by air strikes led by the Israeli air force in key target areas just before the sun had set yesterday.
In other news, the US Federal reserve board released the Federal Open Market Committee minutes yesterday afternoon. According to the FOMC Meeting Minutes, “economic activity has continued to expand at a moderate pace”, housing recovery is likely to be underway, and a few members are in favor of more QE (Quantitative Easing) once so-called Operation Twist ceases by yearend. Some members also questioned the effectiveness of the recent asset purchases and whether moderate growth warrants further purchases.
The market will eagerly follow updates on the Gaza unrest, and will look at a few more important economic releases later today, particularly Canada’s Manufacturing Sales, US CPI, Unemployment Claims, FOMC Member lacker's speech, and Philly fed manufacturing Index.
Gold posted another lackluster trading session with a mere $13 range printed yesterday. Bulls clearly do not want to let go of $1,720 minor support, but both sides are definitely in a precarious situation. $1,700 and $1,740 remain as the key areas to watch.
What a difference a day makes. Unlike gold, oil looks set for a few days, or even weeks, of volatility brought about by attacks happening in and around Israel. News of this incident sent oil $1.50 higher to $86.55 and price seems to look for more upside. Any other geopolitical uncertainty or escalation in Israel could propel oil prices further higher.