Prices for precious metals, including gold, silver, platinum, and palladium, increased on Monday following reports of a United States operation leading to the capture of Venezuelan President Nicolás Maduro over the weekend. The reported events were cited by investors and analysts as contributing to heightened geopolitical risks and increasing demand for safe-haven assets. Crude oil prices experienced minor fluctuations, while regional share prices were predominantly higher.
Precious Metals Respond to Geopolitical Reports
Gold Performance
Spot gold advanced, reaching approximately $4,411.14 per ounce by 0312 GMT, marking a 1.9% increase and a one-week high. U.S. gold futures for February delivery also gained 2.1% to $4,419.90. This movement was attributed to investors seeking to protect against geopolitical risks, according to market analysts.
In the previous year, gold prices registered an increase exceeding 60%, marking its strongest annual performance since 1979. The metal reached an all-time high of $4,549.71 on December 26, 2024. This growth was influenced by factors such as anticipations of interest rate reductions, substantial acquisitions of bullion by central banks, and investor apprehension regarding global tensions and economic uncertainties.
Silver and Other Metals
Spot silver increased by 4.4% to $75.82 per ounce. Silver concluded the previous year with a 147% rise, surpassing gold, and reaching an all-time high of $83.62 on December 29. Its performance was influenced by its designation as a critical U.S. mineral in the past year, alongside supply limitations amid increasing industrial and investment demand.
Other precious metals also saw gains:
- Platinum: Spot platinum was up 2.2% at $2,190.55 per ounce, reaching a one-week high in early Asia hours. It had previously reached an all-time high of $2,478.50 on the preceding Monday.
- Palladium: Palladium registered a 1.8% increase, trading at $1,667.45 per ounce.
Developments in Venezuela
Reported Capture and Political Transition
Reports emerged over the weekend concerning the capture of Venezuelan President Nicolás Maduro by the United States on Saturday. The operation was reported to have resulted in civilian fatalities. Following these events, Vice President Delcy Rodriguez assumed the role of interim leader, while maintaining that Maduro remains the president.
US Stance on Venezuelan Oil
US President Donald Trump stated an intention to utilize Venezuela's oil reserves and asserted that the US would manage the country until a "safe, proper and judicious transition" could be implemented, following the reported seizure of Maduro. Industry analysts, however, have indicated that this development is unlikely to generate an immediate effect on energy costs for consumers and businesses. Experts also noted that substantial investment, potentially billions of dollars, would be required to revitalize Venezuela's oil infrastructure, which has been in a state of decline since the early 2000s. Vasu Menon, an investment strategist at OCBC bank, characterized Venezuela's crude production as consistently "lacklustre" over several years, currently contributing approximately 1% to the global oil output.
Broader Market Context and Economic Factors
Crude Oil and Regional Shares
In contrast to precious metals, crude oil prices exhibited minor fluctuations and were slightly lower by mid-morning on Monday. Regional share prices were predominantly higher.
Expert Analysis and Interest Rate Expectations
Tim Waterer, chief market analyst at KCM Trade, commented that "The events in Venezuela have reignited safe-haven demand, with gold and silver among the beneficiaries as investors look to protect against geopolitical risks."
Federal Reserve Bank of Philadelphia President Anna Paulson stated on Saturday that further central bank rate cuts might not occur immediately after a period of active easing last year. Despite this, investors continue to anticipate at least two rate cuts by the U.S. Federal Reserve this year. Market participants are also awaiting non-farm payroll data, scheduled for release on Friday, for further indications regarding potential Fed rate adjustments. Assets that do not yield interest are typically observed to perform well in environments characterized by low interest rates and periods of geopolitical or economic instability.