After the removal of Venezuelan President Nicolas Maduro by the US, expectations of increase in crude oil production there have changed the equation of the global market. This development has deepened fears of a ‘global supply glut’ this year amid weak demand. While crude oil prices have declined, gold’s shine as a safe investment has increased and it has reached its highest level in two weeks.
Brent and WTI crude futures continue to fall due to the possibility of lifting of oil embargo from Venezuela after US action and fear of increasing supply.
The main reason for pressure in the market is the arrest of the Venezuelan President by the US last Saturday. This has strengthened the possibility that America may lift the ban on Venezuelan oil, which will increase production. Due to this, Brent crude futures fell 0.2% to $ 61.62 per barrel, while US West Texas Intermediate (WTI) crude futures were trading 0.3% lower at $ 58.15 per barrel.
The petroleum sector in Venezuela, the country with the world’s largest oil reserves, was collapsing for a long time due to US sanctions and lack of investment.
Venezuela is a founding member of the Organization of the Petroleum Exporting Countries (OPEC) and has the world’s largest oil reserves of approximately 303 billion barrels. Despite having such huge potential, its oil sector has been facing continuous decline for a long time due to many reasons including severe lack of investment and US sanctions. Now with the change in leadership the market is expected to increase supply.
Signs of interest rate cut by the Federal Reserve and geopolitical tension in Venezuela increased demand for gold, prices at two-week peak.
Unlike crude oil, gold prices witnessed a rise today and hit a one-week high. Signals from Federal Reserve officials that they are easing monetary policies have raised expectations of an interest rate cut. Additionally, tensions in Venezuela have increased demand for safe-haven assets. Gold rose 0.4% to $4,465.32 an ounce in spot trade. There was a jump of about 3% in the last session.
Gold’s best annual performance since 1979, now investors’ eyes are on upcoming US employment data and monetary policy.
Gold hit an all-time high of $4,549.71 on December 26 and finished the year up 64%, its best annual performance since 1979. Investors are currently expecting US interest rate cuts at least twice this year. Market direction is awaited for ‘Non-Farm Payrolls’ data due on Friday, which will provide more clarity about the upcoming policies of the US central bank.
Silver and platinum also broke records, after touching all-time high, there is a tremendous bullish atmosphere in the precious metals market.
Talking about other precious metals, silver rose 2.9% to $ 78.72 an ounce in spot trade, while on December 29 it had made an all-time high of $ 83.62. At the same time, platinum is trading 2.5% higher at $ 2,327.17 an ounce after touching a record high of $ 2,478.50 on Monday. It had jumped more than 5% at the start of the session. Apart from this, palladium also increased by 0.8% and reached $ 1,721.74 per ounce.