Is the Venezuela Crisis Fueling Gold’s Price Surge?

Gold Strengthens in Early Asian Trade

Gold prices (XAU/USD) advanced to nearly $4,500 per ounce during Wednesdays early Asian session, gaining over 1% as rising geopolitical uncertainty and shifting monetary policy expectations fueled safe-haven demand. The release of the US ISM Services PMI later in the day remains a key event for traders gauging economic momentum.

Venezuela Crisis Heightens Market Risk

Market sentiment turned cautious following the US militarys large-scale strike on Venezuela over the weekend. Washington confirmed the capture of President Nicolás Maduro and his wife, escalating political instability in the region. Maduro has pleaded not guilty to US narco-terrorism charges, intensifying the diplomatic rift. Analysts note that heightened uncertainty could sustain demand for safe-haven assets such as gold in the short term.

Fed Minutes Reinforce Rate-Cut Bias

The latest Federal Open Market Committee (FOMC) Minutes revealed that several Federal Reserve officials view additional interest rate reductions as appropriate if inflation continues to ease. However, divisions persist over the timing and extent of future cuts. According to the CME FedWatch Tool, markets currently assign an 82% probability that the Fed will leave rates unchanged at its upcoming January 27–28 meeting. Lower borrowing costs generally enhance the appeal of non-yielding assets such as gold by reducing opportunity costs.

Focus Turns to US Employment Report

Attention now shifts to the December US employment report due Friday. Economists expect an increase of 55,000 jobs with the unemployment rate edging down to 4.5%. A stronger-than-anticipated result could bolster the US Dollar (USD), potentially weighing on the USD-denominated price of gold in the near term. Conversely, weaker data would reinforce expectations for policy easing and could lift the precious metal further.

Outlook

With global tensions simmering and monetary uncertainty persisting, gold‘s upward momentum appears supported in the immediate future. Investors remain focused on economic indicators and central bank commentary for cues on the metal’s next move.