Gold trades firm as US-Venezuela tensions keep geopolitical risks elevated

LONDON (January 5) Gold (XAU/USD) trades with a bullish bias at the start of the first full trading week of 2026, as heightened tensions between the United States (US) and Venezuela drive fresh safe-haven demand. At the time of writing, XAU/USD trades around $4,420, up nealry 2% on the day.

Over the weekend, the US launched a major military operation in Venezuela, carrying out air and ground strikes that led to the capture of Venezuelan President Nicolás Maduro and his wife, Cilia Flores. US President Donald Trump said the US would temporarily “run” Venezuela. “We’re going to run the country until such time as we can do a safe, proper and judicious transition,” Trump told reporters.

The sharp escalation between the US and Venezuela, combined with the ongoing Russia-Ukraine conflict, keeps Gold supported close to record highs near $4,549 set on December 26.

Meanwhile, expectations of further monetary policy easing by the Federal Reserve (Fed) add an additional layer of support as investors turn their attention to a busy week of US economic data.

The spotlight later on Monday falls on the ISM Manufacturing Purchasing Managers Index (PMI) for December, followed by the S&P Global Composite and Services PMIs on Tuesday. Markets will also digest the ISM Services PMI and JOLTS Job Openings report on Wednesday, weekly Initial Jobless Claims on Thursday, and the closely watched Nonfarm Payrolls (NFP) report on Friday.

Market movers: Geopolitical uncertainty and Fed guidance remain in focus

• Venezuelan President Nicolás Maduro is being held at a detention center in Brooklyn to face drug- and terrorism-related charges. The move has drawn international criticism. However, the US president defended the action and issued sharp warnings to other countries in the region, saying Cuba looks ready to fall amid its economic troubles and that Mexico must get its act together on cartel violence. He also repeated controversial remarks about the strategic importance of Greenland.
• On the monetary policy front, investors are pricing in two interest rate cuts this year following a cumulative 75 basis points (bps) of easing in 2025. However, the Fed’s latest dot plot from the December FOMC meeting points to only one cut in 2026. Recent data showed the US economy expanded at an annualised pace of 4.3% in Q3, while inflation showed some signs of cooling, with the Consumer Price Index (CPI) rising 2.7% YoY in November, keeping the door open for further policy easing.
• Philadelphia Fed President Anna Paulson said over the weekend that she expects inflation to moderate, the labour market to stabilise and US economic growth to come in around 2% this year. Speaking ahead of the Allied Social Science Associations Annual Meeting, Paulson noted that the job market has been bending but not breaking. She said she views the current level of the funds rate as still a little restrictive, adding that some modest further policy adjustments could be appropriate later in the year.
• According to the CME FedWatch Tool, markets widely expect the Fed to keep interest rates unchanged at the January 27-28 meeting, with only an 18.3% probability of a rate cut. The odds of a cut rise to around 44% for the March meeting.