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Commodities gains as Geopolitical tension rise, FOMC statement in sight

COMEX Gold advance for the second straight session to $2,465, as tensions in the Middle East escalated. Meanwhile, the Bank of Japan kicked off a flurry of central-bank meetings by raising interest rates, with a Federal Reserve decision expected later in the day. The market buying into safe-haven bullion following the killing of the highest-ranking Hamas political official since the beginning of the Israel-Gaza conflict.

WTI Crude Oil surged above $76 after Hamas said Israel killed its political head, escalating tensions in the region that produces about a third of the world's crude. Hamas claimed that Ismail Haniyeh was killed in an attack in Iran. It followed Israel's earlier attack on Beirut, which killed a senior Hezbollah commander. The market is assessing the potential impact of further escalation on Iranian production and exports.

LME base metals trading positive after weak factory data from China bolstered expectations for Beijing to take stronger action to support a struggling economy. LME Copper advanced more than 2%, along with other metals as China’s leaders pledged to step up support measures and stabilize market confidence at a Politburo meeting to achieve full-year growth targets. China’s factory activity shrank for a third straight month in July, extending the weakness in manufacturing that’s weighed on metals prices. LME Aluminium and Nickel is trading higher by 1.80% and 2.50% respectively.

European natural gas prices extended their advance, highlighting intensifying concerns over fuel supplies amid geopolitical risks. Benchmark futures rose as much as 2.6% to near €36 a megawatt-hour on Wednesday, a level considered elevated for summer. Contracts are on track for a fourth day of gains as traders find it more challenging to build the region’s stockpiles ahead of winter. (Bloomberg)

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