Gold prices jumped around 5% over the weekend following the unexpected US capture of Venezuelan president Nicolas Maduro on Saturday.
Comex continuous gold prices rose from $4,329.60/oz at the close on Friday to $4,458.70/oz on Monday afternoon at the time of writing.
Other precious metals also climbed, with silver, platinum, and palladium futures rising around 5.3%, 3.7% and 2%, respectively.
On Saturday, the US carried out multiple strikes against targets in and around Caracas, the capital of Venezuela, including the La Carlota air base. US Special Forces then moved to one of Maduro's safe houses in Caracas, where Maduro and his wife, Cilia Flores, surrendered.
The increased geopolitical tensions resulting from the US intervention have further increased investor appetite for safe-haven assets. However, gold prices didn't rise as much as one might expect, falling short of the record gold price of $4,552.70/oz on December 26.
The relatively subdued response to the US intervention may be partly due to the fact that geopolitical tensions have been escalating for a year; however, some analysts warn that investors might underestimate the geopolitical risk. As Venezuela doesn't have significant oil production on a global scale (despite large reserves), it's unlikely to have a large direct impact on markets. However, it's still uncertain what the broader implications for Venezuela and the region will be, and sentiment and geopolitical risk could certainly indirectly affect markets.
At a press conference this weekend, US president Donald Trump said that the US plans to "run" the country, though he gave no further details on how he plans to do that, nor mention reinforcing the country's democratic process.
"We will run the country until such time as we can do a safe, proper and judicious transition," Trump said. "We can't take a chance that someone else takes over Venezuela who doesn't have the interests of Venezuelans in mind."
Though Maduro was captured, this didn't end his regime. Vice president Delcy Rodriguez has taken over leadership of Venezuela as interim president, emphasising that the government still considers Maduro the president and accusing the US of kidnapping Maduro and his wife and trying to get its hands on the country's oil reserves.
Meanwhile, Trump said he was willing to work with Rodriguez, but specifically ruled out opposition leader Maria Corina Machado, who last month won the Nobel Peace Prize for her work promoting democracy amid expanding authoritarianism in Venezuela.
"She doesn't have the support within or the respect within the country," Trump said about Machado.
Fears are that the US intervention could lead to a power vacuum in Venezuela, with the intervention echoing those in Iraq and Afghanistan, which resulted in lengthy conflict and instability with many civilian casualties.
A similar scenario could prove catastrophic for the country, which has numerous players that could potentially vie for power. The government is fractured, the population repressed, the country is rife with illegal armed groups, and guerrillas operate in the border region with Colombia.
Rather than detail a plan for stability in the country, Trump was eager to highlight his plan to exploit Venezuela's national resources.
"The [US] oil companies are going to go in," Trump said. "They're going to spend money. We're going to take back the oil that, frankly, we should have taken back a long time ago."
