Oil and gold prices surged this week after western governments mooted plans for military intervention in Syria following last week's chemical weapons attacks on citizens in Damascus.
Brent crude oil jumped above $117 a barrel while the US benchmark soared to its highest level in more than two years. The price action was in response to worries the Syrian conflict could eventually spread to other major crude producers in the Middle East, a region that accounts for nearly a third of global oil output. A substantial production outage in Libya has compounded the problem, after an armed group shut down a pipeline connecting the country's ports with its largest western oilfields.
If western forces do take action, the attached risk premium could seemingly be built in for quite a while, too. "Given that the end result of any military action is likely to be drawn out and messy, the doors for Brent prices towards $120 have now been opened," Reuters quoted analysts from Energy Aspects as saying.
Meanwhile, the price of gold has climbed above $1,420 an ounce and is up nearly 20 per cent from its lows in June of $1,196. "Gold has started behaving like a safe-haven currency again," wrote analyst John Meyer of SP Angel in a note to clients, noting gold "is still 15 per cent off the highs of $1,686 an ounce at the start of the year". Technical chart buying is also at work here, according to Kitco's Jim Wyckoff. "The gold market bulls have the near-term technical advantage. A two-month-old uptrend is in place on the daily bar chart."
