Gold prices resumed its upside on Monday as the metal hit a one-week high on increased safe-haven demand.
Silver prices also surged more than 4%, mirroring strong gains from last year.
Meanwhile, oil prices were volatile as concerns about oversupply outweighed risks from the ongoing crisis in Venezuela.
Additionally, copper prices surged toward a record high, driven by market optimism and growing concerns over tightening supplies expected in the new year.
At the time of writing, the three-month copper contract on the London Metal Exchange was at $12,819.55 per ton, up 2.4%.
Gold prices surged by over 2% on Monday, hitting a one-week high. This flight to safety was triggered by geopolitical unrest following the US capture of Venezuelan President Nicolas Maduro.
On Sunday, US President Donald Trump made statements to reporters indicating a potential for further military action in Venezuela.
Specifically, he suggested that another strike could be ordered against Venezuela if the nation does not cooperate with US efforts to open its oil industry and halt drug trafficking.
Furthermore, he implied that military action might also be directed at Colombia and Mexico unless they reduce the flow of illicit drugs.
Gold recorded its largest annual increase since 1979 last year, climbing approximately 64%.
This significant gain was fueled by several factors, including Federal Reserve interest rate reductions, heightened geopolitical instability, substantial purchases by central banks, and an increase in holdings within exchange-traded funds.
At the time of writing, the COMEX gold contract was at $4,428.90 per ounce, up 2.3%, while silver was at $74.698 an ounce, up 5.2%.
Investors are currently anticipating a minimum of two US interest rate cuts this year.
Markets will therefore be looking to Friday’s December non-farm payrolls report for additional indications regarding central bank monetary policy.
Last year, silver prices surged by 147%. This sharp increase was fueled by several factors: its new status as a US critical mineral, ongoing supply shortages, and increasing demand from both investors and the industrial sector.
Silver dropped around 16% once it reopened after Christmas.
“That’s a scary move, and it could be sufficient to drive out the weaker hands, particularly those who bought when silver was above $75 and rallying,” said David Morrison, senior market analyst at Trade Nation.
But gold only fell 6% over the same period. Could that be sufficient to reset the market for a rally to new highs? Possibly. But one thing seems likely, and that is that investors should prepare for more volatility.
Oil volatile
Despite worries over the effect on oil flows following the US apprehension of Venezuelan President Nicolas Maduro—whose country holds the world’s largest oil reserves—oil prices declined for most of Monday before rising again.
The drop in prices earlier in the day was attributed to the abundance of global supplies.
At the time of writing, the price of West Texas Intermediate crude oil was at $57.63 a barrel, up 0.6%, while Brent was at $61.04 a barrel, up 0.5%.
Both benchmarks were volatile as investors evaluated the situation in Venezuela, an OPEC member, and the possible effect on global oil supply, given that the country’s crude exports were subject to a US embargo.
“This muted reaction suggested that traders were looking beyond immediate geopolitical developments and focusing instead on the outlook for future production, sanctions and investment flows,” Morrison said.
With OPEC+ maintaining output levels and US sanctions still in place, markets were reluctant to price in a near-term supply shock. Instead, the unruffled oil market appears to be pricing in an orderly transition in Venezuela’s leadership, along with the opening up of its oil market to the US majors.
Following the detention of Venezuelan President Maduro in a New York jail on Sunday, US President Donald Trump announced that Washington would assume control of the country and that the existing embargo would remain in effect.
However, analysts noted that any additional interruption to Venezuela’s oil exports would likely have minimal immediate effect on global prices, given the current ample supply in the market.
Venezuela’s oil output has fallen sharply in recent decades, a result of nationalising oil operations in the 2000s, which led to mismanagement and insufficient investment from foreign companies.
Last year, the average output was approximately 1.1 million barrels per day (bpd), representing only 1% of the total global production.