​With relatively quiet central banks over the past weeks in terms of interest rate decisions and inflation slowly coming down, financial markets have calmed down with the exception of the impact following the war between Israel and Hamas. The start of the war has reignited interest in gold as a safe haven asset. While gold has been trading close to its historical high throughout the past years, the recent events led to another record high of $2,074 per ounce. After the initial shock from the war, gold declined again slightly, but has since regained most of its value, as the US dollar is getting weaker. Despite high interest rates and positive real rates, gold remains attractive. It is widely assumed that inflation will remain elevated for quite a while. Yet, positive real rates will do so too given that it takes a lot of interest rate cuts by central banks, which will take time. In the medium-term future, gold will not lose its attractivity, due to an elevated crisis risk and the general instability around the world. Since 2022, gold’s price has increased by more than 10%, as shown in Figure 1. While gold remained stable during these times, oil has behaved much more volatile. Compared to the beginning of 2022 WTI crude oil is now down around 5%, despite being up more than 50% in June 2022. Oil strongly soared when the war between Russia and Ukraine started and maintained an upward trend until the summer of 2022. Then, it started to gradually fall to more normal levels. 2023 was characterized by supply cuts to prevent the price from crashing. Further cuts in the summer of 2023 resulted in consistently raising prices for the first time since the war started. The latest war further led to price increases, which stopped the initial downward trajectory, but it was only a brief reaction. Currently, oil prices are still on the decline with the current supply, as industrial demand is slowed. The postponed OPEC+ meeting also contributed to the latest declines.

​The conflict between Israel and the Hamas is in full force and it seems unlikely that the situation will be resolved soon. While the conflict started with an attack from Hamas on civilians in Israel, the focus has fully shifted towards Gaza with group, air, and sea retaliation by the Israel military. Israel is strongly focusing on Gaza, as it is seen as the center of the Hamas. The conflict in Gaza is widely seen as a precarious situation, as Israel is completely blocking entry or exit even for vital goods, such as food, water, and medical supplies. While Israel was supported initially by most Western countries (especially due to the many hostages taken), support is continuing to fade, due to the humanitarian crisis it caused in Gaza. Despite the decreasing support, Israel seems determined to not only free all hostages, but also disabling the military and governmental capabilities of the Hamas. Unsurprisingly, the conflict also affected financial markets significantly. While initial price shocks mostly normalized since early October 2023, oil markets could experience further volatility. Additionally, given the already pressured economies, investors move more capital into safe-haven assets, in particular US-Dollar and gold.