By Florence Tan and Alex Lawler

SINGAPORE/LONDON (Reuters) – Oil prices are expected to fall when trading resumes on Monday as Israel’s retaliatory strike on Iran over the weekend bypassed Tehran’s oil and nuclear infrastructure and did not disrupt energy supplies, analysts said.

and U.S. West Texas Intermediate crude futures gained 4% last week in volatile trade as markets priced in uncertainty around the extent of Israel’s response to the Iranian missile attack on Oct. 1 and the U.S. election next month.

Scores of Israeli jets completed three waves of strikes before dawn on Saturday against missile factories and other sites near Tehran and in western Iran, in the latest exchange in the escalating conflict between the Middle East rivals.

“The market can breathe a big sigh of relief; the known unknown that was Israel’s eventual response to Iran has been resolved,” Harry Tchilinguirian, group head of research at Onyx said on LinkedIn.

“Israel attacked after the departure of U.S. Secretary of State Antony Blinken, and the U.S. administration could not have hoped for a better outcome with U.S. elections less than two weeks away.”

Iran on Saturday played down Israel’s overnight air attack against Iranian military targets, saying it caused only limited damage.

“Israel’s not attacking oil infrastructure, and reports that Iran won’t respond to the strike remove an element of uncertainty,” Tony Sycamore, IG market analyst in Sydney, said.

“It’s very likely we see a ‘buy the rumour, sell the fact’ type reaction when the futures markets reopen tomorrow,” he said, adding that WTI may return to $70 a barrel level.

Tchilinguirian expects geopolitical risk premium that had been built into oil prices to deflate rapidly with Brent heading back towards $74-$75 a barrel.

UBS commodity analyst Giovanni Staunovo also expects oil prices to be depressed on Monday as Israel’s response to Iran’s attack appeared to have been restrained.

“But I would expect such downside reaction to be only temporary, as I believe the market didn’t price a large risk premium,” he added.

Investing.com– Gold prices fell from near record highs in Asian trade on Monday as easing concerns over a bigger conflict in the Middle East dented safe haven demand for the yellow metal.

Traders were largely biased towards the dollar in anticipation of the 2024 presidential election, which is now a week away. Flows into the were also spurred by expectations of increased political uncertainty in Japan, after a coalition led by the ruling Liberal Democratic Party lost its parliamentary majority in a weekend election. 

fell 0.7% to $2,729.65 an ounce, while expiring in December fell 0.5% to $2,741.80 an ounce by 00:11 ET (04:11 GMT). 

M.East fears ease after Israeli strike 

Concerns over a bigger conflict in the Middle East eased after Israel did not attack Iran’s oil and nuclear facilities in a strike over the weekend. 

While Tehran did threaten retaliation for the attack, Iranian leaders also downplayed the impact of the Israeli strike. 

Concerns over Israel’s attack on Iran- over an early-October strike- had been a key point of uncertainty for markets, especially on fears that any damage to Iran’s oil or nuclear infrastructure would mark a dire escalation in the conflict. 

This notion had fueled safe haven demand for gold over the past month, with the yellow metal still remaining in sight of recent peaks. 

Increased uncertainty over the U.S. presidential election is also expected to spur safe haven demand, especially with recent polls showing a tight race between Donald Trump and Kamala Harris. But the dollar appeared to be benefiting more from this uncertainty. 

Other precious metals fell amid strength in the dollar. fell 0.8% to $1,026.90 an ounce, while fell 1% to $33.435 an ounce. 

Copper retreats with more economic cues on tap

Among industrial metals, copper prices fell on Monday with focus turning to a slew of key economic readings due this week.

Benchmark on the London Metal Exchange fell 0.6% to $9,520.50 a ton, while December fell 0.7% to $4.3373 a pound. 

The red metal was nursing steep losses through November as traders were largely underwhelmed by more stimulus measures in top copper importer China.

Data released over the weekend showed China’s fell sharply in September. data from the country for October is due later in the week and is set to provide more cues.

Gross domestic product data from the and is also on tap this week, as is data- the Federal Reserve’s preferred inflation gauge.

Investing.com– Oil prices fell sharply Monday, as the weekend’s Israeli strike against Iran avoided oil and nuclear facilities, making the future disruption of energy supplies less likely. 

At 08:50 ET (12:50 GMT), fell 5.9% to $71.14 a barrel, while fell 6.3% to $67.27 a barrel.

Both contracts were close to their weakest levels since early-October.

Israel strike against Iran avoids oil, nuclear sites 

Israel launched a strike against several Iranian military sites on Saturday, but avoided the country’s major oil production and nuclear facilities. 

Iran downplayed the impact of the attack, but still threatened retaliation. 

The Israeli attack quelled concerns over a major escalation in the long-running Middle Eastern conflict, potentially disrupting oil supplies from the crude-rich region. 

This notion had buoyed crude prices over the past month, especially after Iran attacked Israel at the beginning of October. 

But despite Israel showing some restraint against Iran, the broader conflict in the Middle East still continued as Israel kept up its offensive against Hamas and Hezbollah. 

“Clearly, if we do see some de-escalation it would allow fundamentals once again to dictate price direction. And with a surplus market over 2025, this would mean that oil prices are likely to remain under pressure,” said analysts at ING, on a note.

Economic data barrage on tap this week

Beyond the Middle East conflict, the focus this week is on a slew of key economic readings for more cues on global oil demand.

Gross domestic product data from the and the are due in the coming days, while data – the Federal Reserve’s preferred inflation gauge, and the widely-watched monthly are also due later in the week. 

data from China – the world’s biggest oil importer – is due later in the week, offering up more cues on the country after it unveiled a string of major stimulus measures over the past month. 

(Ambar Warrick contributed to this article.)