Quick overview

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Gold (XAU/USD) increased to about $4,440. As the Venezuela crisis introduces geopolitical uncertainty, the precious metal continues to rise and reaches a one-week high due to demand for safe havens.

 

Traders will keenly watch US economic data, such as Nonfarm Payrolls (NFP), for hints about the direction of monetary policy. After the US Army’s Delta Force attacked Venezuela and captured its President Nicolás Maduro and his wife on Saturday, tensions between the US and Venezuela reached a new high

Maduro began an extraordinary legal battle with significant geopolitical ramifications on Monday when he entered a not guilty plea to US charges in a narco-terrorism case against him. Traditional safe-haven assets are fueled by increased geopolitical tensions and uncertainty in this area.

The upside of the yellow metal is partly due to dovish expectations of the US Federal Reserve (Fed). According to the most recent Federal Open Market Committee (FOMC) Minutes, the majority of Fed officials agreed that additional interest rate cuts were necessary as long as inflation decreased.

Still, they couldn’t agree on when or how much. Lower interest rates could support the non-yielding precious metal by lowering the opportunity cost of holding gold. On Friday, everyone will be watching the US employment report for December.

55,000 new jobs are anticipated to be added to the US economy in December, while the unemployment rate is predicted to drop to 4.5 percent. In the short term, this could strengthen the US dollar (USD) and weaken the price of commodities denominated in USD if the reports indicate a better-than-expected result.