By Ronnie Harui and Rhiannon Hoyle
Precious metals prices rose after the U.S. ousted Venezuelan President Nicolas Maduro in a military operation over the weekend, while oil trading was muted as market participants weighed the impact on global crude supply.
The Trump administration's move to capture and extract the Venezuelan president was perceived as raising geopolitical risk across Latin America and enhancing the safe-haven appeal of precious metals like gold.
Gold should get a tailwind on a flight to quality and heightened uncertainty, said Nicky Shiels, head of research and metals strategy at precious-metals refiner and trader MKS PAMP. "Welcome back to the rollercoaster," Shiels said.
The ouster is also likely to accelerate gold demand among non-Western central banks, said Shiels.
Spot gold was 1.7% higher at $4,404.89 a troy ounce in Asian trade on Monday, while spot silver climbed 3.6% to $75.45 an ounce.
Meanwhile, oil prices swung between losses and gains to trade in a mixed pattern as market participants digested Maduro's removal and implications for the global oil market.
Any gains for crude will likely be capped by concerns about oversupply, after the Organization of the Petroleum Exporting Countries said Sunday that it doesn't plan to change its oil production targets following the U.S.'s weekend actions in Venezuela.
Eight OPEC+ members led by Saudi Arabia said they planned to maintain a pause discussed in November on oil output increases for the first three months of this year, citing seasonality.
Although Venezuela has vast crude reserves, its oil industry has been hobbled by decades of mismanagement and underinvestment.
The events in Venezuela "pose minimal near-term supply risks and thus offer minimal chances of a meaningful oil price bounce," Julius Baer's Norbert Rucker said in an email.
"Venezuela's export volumes represent only a small proportion of the current oil market supply glut. Parts of the country's production are operated by one of the U.S. oil majors, who, thanks to U.S. sanctions waivers and implicit protection, should continue to ship oil to the U.S. Gulf Coast," the head of economics & next generation research said.
Front-month WTI crude oil futures were 0.1% lower at $57.25 a barrel, while front-month Brent crude oil futures were little changed at $60.75 a barrel.
Asian equity markets mostly advanced, with the Nikkei Stock Average rising 2.6%, South Korea's Kospi index up 2.9% and China's Shanghai Composite Index adding 1.1%.
Defense stocks in Japan and South Korea were higher on expectations that geopolitical risks in Latin America could spur demand for military equipment. In Japan, Mitsubishi Heavy Industries and Kawasaki Heavy Industries rose 8.2% and 6.0%, respectively, while in Seoul, Hanwha Aerospace shares were 5.0% higher and Korea Aerospace Industries gained 2.05%.
Write to Ronnie Harui at ronnie.harui@wsj.com
(END) Dow Jones Newswires
01-04-26 2321ET
