With investors assessing increased geopolitical risks in the wake of the US abduction of Venezuelan leader Nicolás Maduro, gold and silver rose.
Silver increased by about 5% on Monday, while spot gold increased by as much as 2.1%, surpassing $4,420 per ounce. After overthrowing Maduro over the weekend, President Donald Trump stated that the US intends to "run" Venezuela, raising questions about the country's future government. He claimed that Washington needed "complete access" to the nation, particularly its oil reserves.
According to Christopher Wong, an analyst with Oversea-Chinese Banking Corp. in Singapore, the incident "reinforced a backdrop of geopolitical uncertainty."
However, he stated that "developments in Venezuela point to a relatively quick closure, rather than a prolonged military conflict," therefore there are few immediate threats.
With the help of central bank purchases and inflows to bullion-backed exchange-traded funds, gold hit a number of records last year, marking its best annual performance since 1979. Precious metals, which don't pay interest, benefited greatly from the US Federal Reserve's three consecutive rate decreases.
Leading banks are strongly in favor of greater gold gains this year, particularly in light of the Fed's anticipated further interest rate cuts and Trump's restructuring of the US central bank's leadership.
Last month, Goldman Sachs Group Inc. stated that an increase to $4,900 per ounce was its base scenario, with upside risks. According to a panel of prominent economists appearing on Sunday, the US economy is confronting long-term dangers due to growing federal debt.
Preconditions for fiscal dominance, in which the amount of debt forces the central bank to maintain low interest rates to reduce service costs, are getting stronger, according to former Fed chair and Treasury Secretary Janet Yellen.
Last year, silver surged even higher than gold, surpassing levels that were previously unimaginable to all but the most ardent market observers.
Silver has gained from persistent worries that the US government would eventually impose import duties on the refined metal, in addition to the causes that helped gold.
As of 11:45 a.m. Singapore time, gold had increased 1.8% to $4,409.84. Silver reached $75.38, up 3.5%. Palladium and platinum both increased by about 2%. An important indicator of the strength of the US dollar, the Bloomberg Dollar Spot Index, increased by 0.3%.
