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Below the Perspective on markets By Ms. Riya Singh, Research Analyst - Currency and Commodities, Emkay Global Financial Services

Oil Prices Steady as Israel-Iran Tensions Ease, Gold Slides While Copper Declines

Oil prices experienced a minor setback followed by stabilization as global markets closely monitored the evolving dynamics between Israel and Iran, with signs indicating a reduction in hostilities. The focus remains on Israel's objectives, including the elimination of what it perceives as the final bastion of Hamas in Gaza and the liberation of remaining hostages. These pursuits are expected to maintain heightened tensions in the region, influencing market sentiments.

Brent crude hovered above $87 per barrel, having slipped marginally by 0.3% on Monday, while WTI remained close to $82. Analysts anticipate crude oil prices to enter a phase of consolidation, potentially marking a period of stability in the near term.

Meanwhile, bullion metals experienced a notable decline, with gold leading the downward trend. Despite the current weakness, experts view this as a healthy correction rather than a reversal of the bullish trajectory. The future outlook for gold remains optimistic, with its ascent largely underpinned by continued central bank buying, particularly from Asian and other emerging markets. The strategic nature of these purchasing decisions is expected to sustain demand throughout 2024.

Emphasizing the importance of considering indicators such as relative strength indexes (RSIs), observers suggest that after periods of overbought conditions, a period of consolidation or correction is inevitable. Furthermore, speculation arises regarding potential interventions by Japan to bolster the weakening yen, which could inadvertently support gold's resurgence by denting the strength of the US dollar.

In the base metals, copper witnessed a decline from its recent peak near $10,000 per ton, mirroring the broader trend across base metal markets. Market participants are eagerly awaiting a barrage of US data, which could provide insights into the Federal Reserve's future monetary policy decisions, particularly concerning interest rates.

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