Oil, gold prices rise amid fears of widening Middle East conflict

Oil and gold prices rose on Monday amid fears of a widening conflict in the Middle East following a rocket attack on the occupied Golan Heights, which Israel and the United States blamed on Lebanon's Hezbollah.

Oil prices pared last week’s losses, with Brent crude futures up 20 cents, or 0.3%, at $81.33 a barrel by 0010 GMT. U.S. West Texas Intermediate (WTI) crude futures were up 9 cents, or 0.1%, at $77.25 a barrel.

Last week, Brent lost 1.8% while WTI fell 3.7% due to weak Chinese demand and hopes for a ceasefire in Gaza.

“Concerns over escalating tensions in the Middle East led to fresh buying, but gains were limited by ongoing concerns over weak demand in China,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.

Meanwhile, gold prices rose on Monday amid expectations of a US interest rate cut in September, rising geopolitical tensions in the Middle East and a shift in focus to the Federal Reserve's monetary policy meeting later in the week.

Spot gold rose 0.5% to $2,397.65 per ounce by 00:25 GMT. U.S. gold futures rose 0.7% to $2,396.70.

The U.S. central bank’s Federal Open Market Committee meets on July 30-31 and is expected to leave interest rates unchanged at 5.25% to 5.50%. But U.S. jobs data was the weakest on record in June, slowing inflation and comments from top Fed officials have prompted futures markets to fully price in a 25 basis point cut in September.

On the geopolitical front, the Israeli Security Cabinet authorized the government headed by Benjamin Netanyahu to decide on the “method and timing” of the response to the missile attack that took place the day before yesterday, Saturday, on a city in the occupied Syrian Golan, which resulted in the deaths of 12 people. Israel and the United States accused the Lebanese Hezbollah of being responsible for that attack.

Hezbollah denied responsibility for the attack, which is the deadliest in Israel or the territories it occupies since the start of the devastating war on the Gaza Strip on October 7, 2023, while Israel vowed to respond to Hezbollah, and its aircraft bombed targets in southern Lebanon yesterday, Sunday.

Since October 7, 2023, Israel, with American support, has been waging a war on Gaza, resulting in more than 130,000 Palestinian martyrs and wounded, most of them children and women, and more than 10,000 missing amid massive destruction and deadly famine, in one of the worst humanitarian disasters in the world.