South Korea’s KOSPI index experienced a 0.81% drop on Monday due to escalating Israel-Hamas tensions, leading to a 207 billion won ($152.90 million) sell-off by international investors. This marked their 14th consecutive net selling session. Domestic individual and institutional investors, however, managed to record net gains of 198.4 billion and 6.9 billion won respectively.
The geopolitical unrest also affected the Korean won, which depreciated by 0.27% against the dollar. Bond yields rose in response, with the three-year Korean treasury bond yield increasing by 0.9 basis point and the benchmark 10-year yield by 0.3 basis point, indicating falling bond prices.
Major South Korean corporations felt the impact of the crisis. Samsung Electronics (KS:005930), SK Hynix, LG Chem (-2.84%), LG Energy Solution (-2.07%), Korean Air Lines (-1.84%) and Asiana Airlines (-0.3%) all faced declines in share prices due to the ongoing conflict.
In related news, recent U.S. inflation data suggests no quick Federal Reserve rate hikes are on the horizon, indicating a 69% likelihood of unchanged rates that could favorably impact gold prices. However, amplified net short positions in COMEX gold by speculators add a layer of complexity to market dynamics.
Investors are keenly observing Fed Chair Jerome Powell’s upcoming speech and developments in the Middle East to predict gold’s trajectory. President Biden’s stance advocating for Hamas’ elimination signals the potential for prolonged conflict, further intensifying market instability.
Given this scenario, a bullish trend for gold is forecasted in the near term, potentially touching the $2,000 mark amid growing geopolitical unrest and conjecture around the Federal Reserve’s impending decisions.
