Gold, silver prices surge as US-Venezuela conflict boosts safe-haven appeal

Spot gold prices rose 1.03 per cent while silver climbed nearly 1.07 per cent. (File Photo)

Gold and silver prices rose over 1 per cent on Monday as escalating geopolitical tensions following a US strike in Venezuela that led to the capture of President Nicolás Maduro, drove investors towards safe-haven precious metals.

On Multi Commodity Exchange (MCX), gold price for February futures rose 1.28 per cent to Rs 1,37,499 per 10 gram. Silver for March futures jumped 2.83 per cent to Rs 2,43,000 per kg compared to previous close to Rs 2,36,316 a kg. It surged around 6 per cent in intraday trades.

In global markets, spot gold advanced 2 per cent to around $4,415 per ounce, while spot silver surged $75.19 per ounce.

“Venezuela is now the hotbed of disruption and given the developments over the weekend it is interesting to conjecture what can happen in the markets. Gold and silver have gained which is again expected as they tend to react to any disturbance,” said Madan Sabnavis, chief economist, Bank of Baroda.

Venezuela’s share in total oil supplies is less than 1 per cent and there are sanctions here too though some exports are channelled to China. Out of a total of around 105 mn barrels a day, their production is less than a million. However, known reserves are the highest in the world which can be the attraction for the USA, he said.

“The US’s increasingly assertive foreign policy, even if designed to encourage ‘peace through strength’, will heighten geopolitical risk in 2026,” according to a report by BMI, a unit of Fitch Solutions.

“The ousting of Maduro will heighten concerns in Iran in particular, given that Trump has threatened strikes in defence of Iranian protestors — a threat we regard as credible; the governments of Cuba and Nicaragua are also likely to come under greater pressure,” the report said.

“Silver prices are trading close to all-time highs due to strong industrial and investment demand, ongoing supply concerns, and global geopolitical tensions,” said Satish Dondapati, VP & fund manager, Kotak Mutual Fund. “Recent price swings in silver were mainly caused by higher margin requirements announced by the CME and China’s silver export restrictions by January 1,” he said.

Last month, the Chicago Mercantile Exchange Inc (CME) Group raised the initial margin requirement for precious metal futures. The margin requirement for silver futures was raised to $32,500, up from $25,000 earlier. The CME Group in a statement said that the changes were made “as per the normal review of market volatility to ensure adequate collateral coverage”.

According to Jateen Trivedi, VP research analyst – Commodity and Currency, LKP Securities, the momentum in bullion remains strong as a data-heavy week in the US lies ahead, with ADP employment, non-farm payrolls, unemployment rate, and initial jobless claims expected to inject heightened volatility into prices.

“Overall sentiment remains positive, with gold expected to trade in a volatile range of Rs 1,36,500–Rs 1,40,000 in the near term,” he said.