By Martin Baccardax
Global investors reached for classic safe-haven assets Monday, driving gold, silver, and the U.S. dollar higher, as President Donald Trump's ousting of Venezuela President Nicolás Maduro added a new element of geopolitical risk to markets early in the new year.
Maduro's arrest and extradition, as well as Trump's vow to "run" Venezuela and the world's largest proven oil reserves, has stoked concerns for disruption in energy markets and raised the prospect of further U.S. military adventures in other parts of the world.
Trump told Fox News that "American dominance in the Western Hemisphere will never be questioned again," adding that "something will have to be done about Mexico" and the drug cartels that operate there. Administration threats also were aimed at Cuba and Colombia.
"While this can be read as a shift towards a more overtly hemispheric approach to managing geopolitical relations, with the U.S. asserting greater control over developments in its own backyard, it is equally possible to interpret events through the lens of U.S.-China fracturing," said Nel Shearing, group chief economist at Capital Economics.
"Venezuela had become China's (and Russia's) most steadfast ally in Latin America, a position that generated unease across the political spectrum in Washington," he added.
Gold prices jumped on the prospect of U.S.-led action and the potential ramping up of political and military pressures on Taiwan from China, which has disputed the territory's sovereignty from Beijing.
The bullion was rising 2.5% to $4,436 an ounce, with silver rising 4.75% to $76.25 an ounce.
The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, jumped 0.33% to 98.75, helping push U.S. Treasury bond prices higher and yields lower.
Global oil prices, curiously, were little changed, with Brent crude, the global benchmark, rising around 0.2% to change hands at $60.63 a barrel.
Analysts said Trump's assertion that U.S. energy companies will invest "billions" in Venezuela to resume the flow of oil to world markets may take years to come to fruition, if at all. In the meantime, Venezuela's output only amounts to around 1% of global production in a market that already is awash with excess crude.
"There is potential for a large recovery in Venezuelan oil production; however, this will not be a quick process. Any significant increase would likely take several years," said ING's head of commodities strategy, Warren Patterson.
"We will need to see significant investment in Venezuela's oil infrastructure, following years of neglect. And in order for this investment to materialize, we will need to see foreign oil companies agree to invest in the domestic industry," he added. "This is easier said than done, given that both Exxon Mobil and ConocoPhillips had their assets in Venezuela expropriated back in 2007."
Stock market volatility, however, looks muted heading into the start of an important week for equities, which includes key data on jobs, trade, and private sector economic activity over the coming days.
The Cboe Group's VIX index, a benchmark for near-term moves in the equity market, was 1.5% higher at 15.17, a relatively benign level that suggests daily swings of around 0.95%, or 65 points, for the S&P 500 over the next month.
"Global equities are likely to keep looking through the geopolitical shock unless it threatens the broader supply chain or tightens financial conditions, because geopolitics has become a persistent feature rather than a surprise," said Charu Chanana, chief investment strategist at Saxo Markets.
"Equities can continue grinding higher if earnings expectations, liquidity, and rate expectations remain supportive, especially in tech, but headline risk tends to raise dispersion and rotation under the surface," she added.
Write to Martin Baccardax at martin.baccardax@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 05, 2026 06:20 ET (11:20 GMT)
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