It's not often you see gold up $60, oil up $4, bonds bid and equities beaten up. Generally when it happens, it comes with something geopolitical that was unexpected.
That kind of move made sense Monday as the full breadth of the slaughter in Israel was coming into focus. However just hours after the market open on Monday, those moves began to fade and the market seemingly concluded that it wasn't going to result in a regional war.
The key actor here is Iran and the possibility that Israel or someone else launches an offensive against Iran; or Iran or another Middle Eastern country retaliates against Israel if/when it launches its counter-offensive. There are reports that it's amassing 300,000 soldiers and stockpiling weapons with action to come on the weekend, though that's certainly not confirmed.
I wouldn't rule out anything at any time in the Middle East but based on what we know, I find this move to be strange.
The White House said yesterday that there is "no direct evidence that Iran was a participant in these attacks in any way."
For a parallel, I would look at the Abqaiq–Khurais attack in Saudi Arabia in 2019 as a parallel. The massive refinery complex was hit by missiles and it wasn't clear who did it. This was a direct attack on oil infrastructure and crude rose to $63 from $55 but by the end of the week it was back to $59.
Meanwhile gold barely moved on that attack and broader risk markets largely shrugged it off.
As a trader, you always have the paranoia that someone knows something that you don't and today's trade feels a bit like that. These moves in oil and gold in particular are so strong for something that's a known unknown.
The trading textbook says to fear this kind of move and I think that's the right trade today but it's hard to shake the feel that whoever is keeping the bid alive in gold up $60 already knows something that I don't.
