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Oil (BZ=F, CL=F)
Oil prices surged in response to reports that Israel is preparing to strike Iranian nuclear facilities, putting the deal that US president Donald Trump has been pursuing with Tehran at risk.
Brent crude futures (BZ=F) climbed 0.8% to $65.89 a barrel, while West Texas Intermediate futures (CL=F) climbed 0.9% to $62.55 a barrel.
CNN reported that, according to several US intelligence officers, Israeli leaders were considering striking Iran, in a move that would squeeze supply and spark further unrest in the region.
The Middle East supplies around a third of the world’s crude oil. Nuclear talks between the US and Iran could pave the way for more barrels being released, however Israel’s plans have thrown this into question.
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"Such an escalation would not only put Iranian supply at risk, but also (put supply at risk) in large parts of the broader region," ING commodities strategists said.
Considering Iran exports more than 1.5 million barrels per day (bpd), fears of supply disruptions have helped to drive prices higher, said UBS analyst Giovanni Staunovo.
The prospect of higher oil prices will also add to worries over inflation in the UK.
Gold (GC=F)
Gold prices rose on Wednesday, nearing a two-week high, as geopolitical uncertainty pushed investors into the safe haven.
Gold futures (GC=F) gained 0.9% to $3,314.90 per ounce at the time of writing, while the spot gold price climbed 2.3% to $3,313.59 per ounce.
Fears of escalation increased over a potential Israeli strike on Iran’s nuclear facilities, which could trigger retaliatory measures from Tehran has pivoted investors towards the precious metal. Trump’s remarks on peace talks between Russia and Ukraine added to market unease, as he distanced himself from a mediating role.
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The dollar remained under pressure after the Federal Reserve’s cautious economic outlook and Moody’s downgrade of the US credit rating, citing rising government debt.
In a closed-door meeting on Capitol Hill, Trump told Republicans in the House of Representatives not to press for further changes to the bill that would cut taxes and tighten eligibility for the Medicaid health programme.
"There's been again a change in direction related to concern about the fiscal situation of the US and the driver has been the Moody's downgrade, and the market was attracted by the level of $3,300 yesterday," UBS analyst Giovanni Staunovo said.