Gold and Silver: Elevated Political Risk and the Case for Safe-Haven Demand
LONDON (January 5) After reviewing the movements of the precious metals’ futures – gold, silver, platinum, palladium on different time chart patterns, I find them to hardly indicating an exacerbated excitement among the bulls since announcement of the capturing Venezuelan President Nicolas Maduro in an audacious raid over the weekend as after announcing this President Trump, constantly receiving aggressive diplomatic response from all over the world, could disrupt his agenda to proclaim him as one of the top peace maker.
Undoubtedly, his action has generated fresh upheavals for the global trade equations, which have already been disrupted since the enactment of his trade tariff agenda, and could extend supply disruptions, leading to a sudden surge in global inflation.
On Sunday, President Donald Trump said Washington would take control of the oil-producing nation and that the U.S. embargo on all Venezuelan oil remained in full effect, after Maduro spoke in New York.
Though Trump has also raised the possibilities of further U.S. military interventions in Latin America, and suggests Colombia and Mexico could also face military action if they do not reduce the flow of illicit drugs to the United States.
I find that amid such a scenario, precious metals under a fix as the traders are still watching Iran’s reaction after Trump threatened on Friday to intervene in a crackdown on protests in the OPEC producer, ratcheting up geopolitical tensions.
Undoubtedly, global investors are facing a fresh surge in geopolitical risk after the U.S. capture of the Venezuelan President and his wife, although initial market reaction has been relatively devoid of nerves, with safe-haven flows lifting gold and other precious metals.
But, despite a bump, gold and silver futures are not picking up the speed as the bullish momentum still looks weakening as both the futures are constantly facing resistance in 1-Hr. chart as trading below the significant resistances amid fear of selling, as trading just near the 200 EMAs.
Finally, I conclude that further elevation on this front could extend indecisiveness, but the surging fear does not look evident enough to generate bullish sentiments as the weekend’s developments are unlikely to have a significant near-term impact on global macro-conditions.
Investing.com
