Israeli Protests Erupt After Recovery of Hostages’ Bodies
Protests have broken out across Israel following the military’s recovery of six hostages’ bodies in Gaza, allegedly killed by Hamas. The country’s largest labor group has called for a strike, warning of a potential shutdown of the entire Israeli economy on Monday.
Prime Minister Benjamin Netanyahu is facing criticism for prioritizing the prolonged conflict over the safe return of the remaining hostages in Gaza. The military conflict has now spread to the West Bank and Lebanon, escalating the risk of a wider regional war.
Market Reaction: Gold Price Update
As of the latest update, the gold price (XAU/USD) is trading slightly lower by 0.02% at $2,502.
Understanding Risk Sentiment in Financial Markets
In times of financial uncertainty, investors often refer to the terms “risk-on” and “risk-off” to gauge market sentiment. During a “risk-on” period, investors are more optimistic and willing to take on higher risk investments. Conversely, in a “risk-off” market, investors tend to play it safe and opt for more stable assets.
During a “risk-on” market:
– Stock markets and most commodities (excluding Gold) tend to rise
– Currencies of major commodity exporters strengthen
– Cryptocurrencies see an increase in value
During a “risk-off” market:
– Bonds, especially government bonds, typically rise
– Gold performs well as a safe-haven asset
– Safe-haven currencies like the Japanese Yen, Swiss Franc, and US Dollar see gains
Specific currencies like the Australian Dollar, Canadian Dollar, New Zealand Dollar, Ruble, and South African Rand tend to rise in a “risk-on” market due to their heavy reliance on commodity exports for economic growth.
On the other hand, major currencies like the US Dollar, Japanese Yen, and Swiss Franc tend to rise during “risk-off” periods due to factors such as reserve currency status, demand for government bonds, and capital protection laws.