Market reaction to changes in Venezuela: Oil prices “did not rise but fell”, gold led precious metals higher

# Source: Wall Street Insights

By Long Yue

The U.S. surprise attack on Venezuela triggered a major geopolitical shock, with safe-haven sentiment driving gold prices to rebound to $4,370 an ounce, spot palladium surging over 3%, and silver jumping 1.7%. However, oil prices unexpectedly fell—analysts pointed out that global supply is set to hit a record surplus, and Venezuela’s output, accounting for less than 1% of the global total, is unlikely to sway the broader trend. Donald Trump announced that the U.S. will deeply intervene in Venezuela’s oil industry and urge American enterprises to invest in its reconstruction, but industry insiders warned that supply recovery amid political instability will be a long and arduous process.

Following the U.S. military operation in Venezuela and the capture of the country’s leader Nicolás Maduro, global financial markets showed a distinct divergent trend. Investors quickly flocked to precious metals for safe-haven purposes, driving gold and silver prices to reverse their previous declines, while the crude oil market remained unusually calm in the face of this geopolitical shock, due to the macro backdrop of global supply glut.

On Monday, January 5, spot gold prices rose nearly 1% in early trading, climbing to around $4,370 per ounce, after dropping 4.4% in the previous week. Silver prices soared 1.7% to hover around $74 per ounce, with platinum and palladium also moving higher across the board—spot palladium surged over 3% to $1,689.08 per ounce. The market’s instinctive reaction to geopolitical uncertainties once again made precious metals a safe haven for capital.

Meanwhile, the crude oil market’s response defied the traditional "war premium" logic and instead turned downward. Although U.S. President Donald Trump confirmed that U.S. forces had launched large-scale strikes, the International Energy Agency (IEA) predicted a record global crude oil supply surplus in 2026. Combined with Venezuela’s extremely low share of global output, the market widely believed that this incident was unlikely to reverse the overall loose supply-demand pattern in the oil market, and oil prices did not see a panic-driven surge.

According to Xinhua News Agency and CCTV News, at noon local time on January 3 (early morning Beijing time on January 4), U.S. President Donald Trump and Defense Secretary Pete Hegseth held a press conference at Mar-a-Lago in Florida regarding the U.S. military’s operation against Venezuela, which resulted in the detention and deportation of Venezuelan President Nicolás Maduro. Trump stated that U.S. forces deployed air, land, and sea assets in the operation, adding that "all of Venezuela’s military capabilities have been rendered combat ineffective". He also noted that the U.S. will "administer" Venezuela until a "safe" transition is implemented.

Trump said he watched the U.S. special forces’ operation to capture Maduro in real time, describing it like watching a "TV show" where he saw "every single detail". He also told U.S. media that the U.S. will be deeply involved in Venezuela’s oil industry.

## Rising Safe-Haven Sentiment Lifts Precious Metal Prices

The severe geopolitical turmoil directly stoked investors’ risk aversion. News of the U.S. military operation immediately sparked a response in the precious metals market. Gold prices staged a strong rebound after a week of declines, climbing back above the $4,370 per ounce mark.

Spot silver surged 1.7%, currently trading at around $74 per ounce.

In addition to gold and silver, other precious metals such as platinum and palladium also rallied across the board. Among them, spot palladium jumped over 3% to $1,689.08 per ounce.

Market analysts pointed out that in the early stages of a geopolitical crisis, capital tends to flee risky assets and rotate into safe-haven precious metals in the first place. Remarks by U.S. Secretary of State Marco Rubio that the U.S. will leverage its oil influence to force Venezuela to make changes further fueled market concerns about the escalating regional tensions, thereby underpinning the upward trend in gold prices.

## Supply Surplus Expectations Cap Oil Price Volatility

In stark contrast to the volatility in precious metals, the crude oil market remained relatively calm. While retail trading data from IG Group showed a brief fluctuation in U.S. crude oil prices, analysts generally expected market sentiment to be suppressed. The core logic behind this lies in the fundamental shift in the global crude oil market’s supply-demand dynamics.

Brent crude oil edged lower, while WTI crude oil held steady.

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