Gold prices have increased, trading around $4,448, due to rising tensions between the US and Venezuela. The US military’s actions have resulted in the capture of Venezuelan President Maduro, altering the geopolitical scene and increasing the demand for Gold as a safe investment. The US Dollar weakened after the ISM Manufacturing PMI data came in at 47.9, below the expected 48.3. These ongoing tensions, combined with weak economic signals, have kept Gold prices close to December’s highs of $4,549.

Upcoming Economic Data

This week, we can expect significant economic data, including the S&P Global Composite and Services PMIs, ISM Services PMI, and the Nonfarm Payrolls report. Regarding monetary policy, while some anticipate several rate cuts, the Federal Reserve’s dot plot indicates only one rate cut in 2026. Gold’s technical outlook is positive. Buyers are coming in around $4,300. Key resistance sits at $4,450, while potential support levels are at the 50-period Simple Moving Average (SMA) near $4,420 and the 100-period SMA around $4,367. Gold is recognized as a safe-haven asset that offers economic stability during difficult times. Central banks, which are significant Gold holders, greatly increased their reserves in 2022. Gold’s price usually moves inversely to the US Dollar and is influenced by geopolitical tensions. The military action in Venezuela has heightened geopolitical risks, making Gold an essential strategy in the coming weeks. Implied volatility for gold options has surged, with option market data showing an increase of over 25% in the last two days. We should consider buying call options to take advantage of potential gains from further escalation while minimizing risks if tensions ease unexpectedly.

Potential Economic Triggers

The weak ISM Manufacturing PMI at 47.9 confirms the economic slowdown we noticed in late 2025, which included a job growth slowdown to just 155,000 in the December report. This weak data strengthens the argument for the Federal Reserve to cut rates sooner than expected, putting more pressure on the dollar. A surprisingly low Nonfarm Payrolls number this Friday could propel Gold past its all-time high of $4,549. We’re witnessing a trend similar to the first quarter of 2022, when the conflict in Ukraine led Gold to rally over 10% in just a few weeks. This period illustrated how quickly investors move to safe assets, and the current circumstances could significantly affect the markets. This historical context suggests strong support for the current rally, even with possible short-term pullbacks. Market positioning data already shows this optimistic sentiment. The latest Commitment of Traders report indicates hedge funds have increased their net-long gold futures contracts by the largest margin in over a year. While this confirms strong buying pressure, it also warns that the trade is becoming crowded. Thus, using defined-risk options strategies is wiser than pursuing large positions in the spot market at these levels. The main risk to this outlook remains a sudden rise in the US Dollar, possibly triggered by a more robust-than-expected jobs report this Friday. A drop below the 50-period moving average near $4,420 could indicate a loss of immediate momentum. We should watch this level for signs of potential reversal or consider taking partial profits on bullish positions. Create your live VT Markets account and start trading now.

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