Sometimes the markets get a geopolitical curveball that moves everything at once. Monday was one of those days, as escalating U.S. pressure on Venezuela sent both gold and crude oil climbing in tandem.
Gold, tracked by the iShares Gold Trust (GLD), rose 2.5% to hit a fresh record near $4,440 per ounce. West Texas Intermediate crude wasn't far behind, jumping 2.6% to $58 per barrel in its strongest single session in two months.
Why Venezuela Matters for Your Portfolio
Over the weekend, U.S. forces intercepted yet another oil tanker allegedly carrying sanctioned Venezuelan crude. That makes two seizures this month alone. The White House then confirmed the Coast Guard is actively hunting down an additional vessel, claiming it's sailing under a false flag and subject to a judicial seizure order.
The situation is clearly escalating, and markets are responding accordingly. Adam Turnquist, chief technical strategist at LPL Financial, explained it well: "The risk of further escalation, particularly if it spreads to Venezuelan allies such as China or Russia, has added a geopolitical risk premium to gold."
But geopolitics is only part of gold's story right now. The macro backdrop is also turning increasingly favorable. Cooling inflation and emerging labor market weakness have pushed the probability of three Federal Reserve rate cuts in 2026 to nearly 40%. Add in a softer dollar, steady central bank buying, and renewed ETF inflows, and you've got a recipe for the kind of rally we're seeing.
Gold is up 67% year-to-date. If it holds anywhere near these levels, we're looking at the best annual performance for the yellow metal since 1978.
Technical Picture Shows More Room to Run
From a technical perspective, gold has decisively broken above its October highs near $4,382, which now acts as key support according to Turnquist's analysis. LPL's models point to a minimum upside target of $4,875, based on the size of the previous trading range.
Now, here's where it gets interesting. Gold's Relative Strength Index has climbed to 76, and prices are trading roughly 23% above the 200-day moving average. By traditional measures, that's overbought territory. But LPL notes that during past record-setting rallies, gold often extended significantly further before buyer exhaustion kicked in.
Prediction Markets Are Pricing In Real Risk
If you want to see how seriously traders are taking the Venezuela situation, look at the prediction markets. They're lighting up with activity around various escalation scenarios.
On Polymarket, traders are currently assigning a 60% probability that U.S. forces seize another Venezuela-linked oil ship by December 31. There's a 34% chance that seizure happens as soon as December 26.
The betting markets focused on Venezuelan President Maduro's political survival are equally telling. Contracts pricing his departure by March 31, 2026 have attracted nearly $2 million in trading volume and currently imply a 39% probability. Push that timeline out to June 2026, and the odds rise to 56%.
Perhaps most striking: traders are assigning a 48% probability to direct U.S.-Venezuela military engagement by March 31, 2026. That's down slightly from 51% the previous day, but still suggests the market sees substantial escalation risk ahead.
When prediction markets, commodity prices, and technical indicators all start pointing in the same direction, it's worth paying attention. The Venezuela situation has introduced a new variable into markets that were already navigating interest rate uncertainty and geopolitical complexity. Gold, at least for now, seems to be the asset traders trust most when those kinds of questions start piling up.