Ella 
Investors are closely watching events in Israel as a geopolitical risk to markets, with some expecting the violence could prompt investors to turn to safe-haven assets.
Gunmen from the Palestinian group Hamas entered Israel on Saturday and launched an unprecedented attack. Western countries, led by the United States, condemned the attack and pledged support for Israel.
Analysts said rising geopolitical risks could lead to buying of assets such as gold and the dollar and could boost demand for U.S. Treasuries, which have been heavily sold off.
“This is a great example of why people need gold in their portfolios,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “It’s the perfect hedge against international turmoil.” He predicted the dollar would also Benefit.
“Whenever there is international turmoil, the dollar will strengthen,” Cardillo said.
In recent weeks, markets have been reacting to expectations that U.S. interest rates will remain higher for longer. Bond yields soared, while the dollar continued its gains. Meanwhile, stocks fell sharply in the third quarter but stabilized last week.
“Whether this is a huge market moment depends on how long it lasts and whether others are drawn into the conflict,” said Brian Jacobson, chief economist at Attachment Wealth Management, referring to the situation in Israel. Jacobson questioned how much impact this would have on oil prices, even though Iran has been increasing production.
Hamas’s attacks have been publicly praised by Iran and Iran’s Lebanese ally Hezbollah.
“Iranian oil production has been increasing, but any progress they make with the United States behind the scenes will be severely undermined by Iran’s actions to celebrate Hamas,” Jacobson said, adding that “the potential loss of production is significant. Important, but not earth-shattering.”
“The key thing is to see how Saudi Arabia reacts,” Jacobson said. Washington has been trying to reach a deal to normalize relations between Israel and Saudi Arabia.
David Kotok, chairman and chief investment officer of Cumberland Advisors in Sarasota, Fla., said the situation is concerning as U.S. power is undermined by dysfunction in Washington. A budget showdown looms as Republicans search for a replacement for ousted House Speaker Kevin McCarthy.
“I am very concerned about more explosive situations that require American resolve and that America’s defense capabilities are being compromised,” Kotok said of the situation in Washington.
