Increased geopolitical risks and policy expectations drive gold prices higher

Geopolitical risks and policy expectations continue to increase, pushing gold prices toward safe haven.

First: The main event promotes: the military conflict between the United States and Venezuela triggers safe-haven demand.

Spot gold prices remained stable above the key support level of $4,300 last week. Gold prices rose after the opening this week, mainly driven by the sudden geopolitical event of the US military action against Venezuela. After the US military captured Venezuelan President Maduro, the market’s risk aversion sentiment increased sharply, and funds poured into safe-haven assets such as gold, the U.S. dollar, and U.S. Treasury bonds. It was a rare situation where all three assets rose at the same time.

2: Geopolitical conflicts escalate and risks spread

The U.S.’s hardline stance has heightened uncertainty: Trump said during Asian trading hours that further military intervention could be possible if Venezuela’s interim president does not respond to U.S. demands. This is the first time the United States has taken direct military action in Latin America since 1989.

Regional reactions have heightened tensions: Colombia’s president publicly denounced the United States for “undermining the global rule of law” and Trump singled out Mexico, asking it to “restore order.” Political risks in South America continue to expand, and the demand for safe havens continues to increase.

1. Increasing tensions over oil resources: The United States threatens to use Venezuela’s oil resources to promote political change, which may lead to broader regional instability and provide continued support for gold.

2. Fed policy supports interest rate cut expectations: The latest Federal Open Market Committee minutes show that most officials believe that if inflation continues to decline, an interest rate cut is reasonable. For a non-interest-bearing asset like gold, lower interest rates mean lower holding costs, which is a positive factor in the medium and long term.

2. Market logic and capital flow analysis: The current market shows typical characteristics of hedging transactions:

The strength of three assets: the U.S. dollar, U.S. Treasuries and gold. The simultaneous gains reflect markets pricing in a potential worst-case scenario for geopolitical conflict and a shift away from riskier assets to safe-haven assets.

Interplay between risk-off trends and USD strength: A rise in the U.S. dollar index has partially offset gold’s gains, but amid a very high risk outlook, the two factors could decouple in the near term, highlighting gold’s currency properties.

Warning about the dangers of overpricing: History shows that markets often overreact to geopolitical crises; therefore, be wary of rapid capital outflows when market trends reverse.

Three: Technical structure and main price levels

1. Trends and channels: The daily chart shows a complete upward channel, and gold prices run along the upper channel line, indicating strong short-term upward momentum.

Major resistance line/bullish/bearish separation line: $4434.56 (former major resistance level). After recently reaching the $4,430 level, the price has retreated slightly. The extent of the medium-term upside potential will be determined based on a breakout of this level.

2. Key support and resistance levels:

Support area: $4400-4405 (intraday callback entry point), $4380 (stop loss reference level).

Upside targets: After breaking through $4434.56, the next targets will be $4440, $4470 and $4490.

4. Risk variables this week: non-agricultural data and trends

1. U.S. non-farm payrolls report for December (Friday): 57,000 jobs are expected to be added. Stronger-than-expected data should support the dollar and keep gold prices in check. Weaker-than-expected data could see gold test the $4,400 level.

Market volatility may increase around the release of data; therefore, traders should be wary of rapid swings between optimism and pessimism.

2. Geopolitical focus: The Special Committee of Venezuela’s interim government has made progress on the issue of releasing Maduro.

U.S. statements and actions toward Colombia and Mexico, as well as coordinated responses from Latin American countries.

5. Interconnections between markets and structural opportunities

1. Rotation of safe assets: If the U.S. dollar falls and U.S. Treasury yields rise, this may signal a revival in risk sentiment, which may weaken interest in buying gold as a safe-haven asset.

Copper prices have regained lost ground recently, reflecting continued strong demand expectations in the AI ​​industry chain. The contrast between industrial metals and gold illustrates divergence in macroeconomic logic; therefore, structural changes in risk tolerance should be focused on.

2. Trading strategy suggestions: Intraday trading strategy: buy at low prices and avoid chasing high prices.

Specific plans:

Long position range: $4,400-$4,405

Stop Loss: Below $4,380

Goal sequence: $4440 → $4470 → $4490

Risk management considerations:

An easing of geopolitical tensions or unexpectedly weak non-farm payrolls data could lead to technical downside.

Position management must take into account asymmetric risks arising from events.

6. Summary and prediction:

Gold is currently supported by geopolitical tensions and expectations of interest rate cuts, showing a strong technical outlook. However, the market has absorbed a large risk premium and future price movements will depend on:

Will the conflict between the United States and Venezuela further escalate or subside;

The impact of non-farm payrolls data on the path of the Fed’s monetary policy;

The relative strength of the U.S. dollar and gold as safe-haven assets changes.

Traders should remain flexible and go with the trend while keeping a close eye on the effectiveness of a breakout of the $4,434.56 level to hedge against downside risks from changes in market sentiment.

Risk warning: Geopolitical events may develop rapidly, and market sentiment may easily amplify fluctuations. It is recommended to maintain low positions, strictly adhere to stop loss orders, and pay attention to checking the signals of different assets.