Breaking: Houthis Strike Saudi Arabia, Brent Hits $111, Gold Below $4,100

On Wednesday, 21 Oct, the Houthis attacked several targets in Saudi Arabia. Reuters reported that a strike on a civilian airport in Dammam killed at least 1 person and injured 8. Another drone attack hit a Saudi oil field, which Anadolu identified as Saudi Aramco’s Shaybah field, killing 2 people. The US State Department then ordered some diplomats and their families to leave its mission in Saudi Arabia.

Concerns grew further after The New York Times, citing unnamed US officials, reported that the US and Israel were planning a short but heavy strike on Iran after the US midterm elections on 3 Nov. The White House declined to comment, and the IRGC Navy’s claim of attacking ships near the Strait of Hormuz has not been independently verified.

Markets fear disruption to oil exports from the Middle East, sending Brent up to around $111.9, its highest since 18 May, and WTI to around $99.4. ING analysts said oil prices now carry a large risk premium due to uncertainty over the Strait of Hormuz.

War headlines usually support gold, but this time pricier oil raised fears that inflation will stay high and the Fed may need to hike rates. According to CME FedWatch, markets price about a 90% chance of a Fed hike by December. Gold pays no interest, so it was sold below $4,100 to around $4,065–4,070. The yen strengthened on risk aversion after the Nikkei dropped more than 1,700 points, with USD/JPY falling from around 158.25 in the morning to around 156.8.

First, Middle East tensions: further attacks on oil facilities or disruption to shipping through the Strait of Hormuz could push oil higher and weigh on gold via rate expectations. US jobless claims are due at 12:30 GMT today, and next week brings the Fed meeting (27–28 Oct) plus the ECB and BoJ. See all release times in the economic calendar, the latest rates on the central bank rates page, and this morning’s gold support and resistance in Gold Price Today 22 Oct