Gold Surges Amid Geopolitical Turmoil and Dovish Fed Signals

Safe-Haven Demand Fuels $40 Rally as Venezuela Crisis Escalates: Gold prices climbed nearly $40 per ounce on Tuesday, driven by intensified safe-haven buying amid rising geopolitical tensions in Venezuela following the U.S. arrest of President Nicolas Maduro. President Donald Trump’s statement on temporarily “managing” Venezuela further amplified uncertainty, boosting investor appetite for precious metals.

Fed’s Easing Hints Add Momentum to Bullish Trend

Dovish remarks from Federal Reserve Board member Stephen Miran provided additional support, labeling current policy as “clearly restrictive” and forecasting over 100 basis points in rate cuts this year. This enhances gold and silver’s allure as hedges against inflation and value preservers.

Ongoing Uncertainties Bolster Precious Metals

Persistent U.S. tariff threats, including potential duties on cast copper, alongside risks in Ukraine, the Middle East, and Venezuela, continue to underpin gold’s strength. Expectations of a more accommodative Fed policy in 2026, potentially under a new easing-leaning chair appointed by Trump, further fuel demand.

Liquidity Injections and Central Bank Buying Sustain Uptick

The Fed’s December announcement of $40 billion monthly market injections increases liquidity, favoring assets like gold. Strong central bank purchases, such as China’s 30,000-ounce addition in November—marking 13 consecutive months—totaling 74.1 million ounces, reinforce prices. The World Gold Council noted 220 tons bought in Q3, up 28% from Q2.

Robust Investment Flows Signal Long-Term Confidence

Investment demand remains solid, with gold ETF long positions at a 3.25-year high last week and silver ETFs hitting a 3.5-year peak on December 23, indicating sustained bullish sentiment among investors.