Jerome Powell Investigated Over Fed HQ Renovation Costs

Gold prices climbed to a record high, breaking above $4,564 an ounce early Monday, as a combination of economic data and geopolitical turmoil fueled investor demand for the safe-haven asset. The rally was driven by a weak U.S. jobs report that solidified expectations for further Federal Reserve interest rate cuts and rising tensions from protests in Iran.

Fed Rate Cut Expectations Fuel the Rally

The primary catalyst for gold's ascent was the latest U.S. employment data, which showed that job growth fell short of forecasts last month. This report reinforced the view that the Federal Reserve will continue to lower borrowing costs to bolster the economy.

Markets are now pricing in at least two more interest rate reductions from the Fed this year, following the three consecutive cuts delivered in the second half of last year. Lower interest rates typically boost gold, as they reduce the opportunity cost of holding the non-yielding precious metal.

The U.S. dollar also weakened, with the Bloomberg Dollar Spot Index dipping 0.1%, further supporting the price of dollar-denominated commodities like gold.

Geopolitical Tensions Add to Haven Appeal

Adding to gold's appeal were deadly protests in Iran, which injected a fresh wave of uncertainty into global geopolitics and energy markets. The possibility of regime change in the Islamic Republic has driven investors toward the security of precious metals.

This event builds on a series of tailwinds that pushed gold to a record-setting performance last year, including heightened geopolitical risk and declining trust in the U.S. dollar. Reflecting this sentiment, numerous money managers have indicated they are maintaining their positions, confident in bullion's long-term value.

Precious Metals See Broad Gains

The positive momentum was not limited to gold. By 8:23 a.m. Singapore time, gold was trading at $4,561.12 an ounce, a gain of 1.1%.

Other precious metals also advanced:

• Silver climbed 2.7%, building on a nearly 10% surge from the previous week and trading just below its own all-time peak.

• Palladium and platinum also posted gains.

Markets Await Supreme Court Tariff Decision

Investors are also watching for a key legal decision in the U.S. The Supreme Court has yet to rule on a case concerning Trump's tariffs, setting Wednesday as the date for its next opinion. A ruling against the tariffs would represent a significant legal defeat for the administration and undermine a central pillar of its economic policy.

German Chancellor Friedrich Merz is heading to India for his first trip to Asia, a strategic visit designed to forge deeper business and defense partnerships. This move comes as Europe's largest economy navigates growing tensions with its traditional trading partners, China and the United States.

Merz is scheduled to meet with Prime Minister Narendra Modi on Monday in Ahmedabad, located in Modi's home state of Gujarat. The agenda includes bilateral talks, a visit to a Mahatma Gandhi memorial, and attendance at a local kite festival.

The high-profile meeting offers both nations a chance to reinforce economic and security cooperation, particularly as relations with the U.S. under President Donald Trump have become strained. Trump's repeated threats to annex Greenland have unsettled European allies, while India faces steep U.S. tariffs of up to 50%.

What's on the Negotiating Table?

During the two-day visit, Germany and India are expected to sign several key agreements aimed at boosting collaboration in critical sectors. The key areas of focus include:

• Business and Semiconductors: General agreements on business cooperation and specific initiatives for semiconductor development are anticipated.

• Critical Minerals: Berlin is actively seeking to reduce its supply chain reliance on China for rare earths and other raw materials. A memorandum of understanding is expected to give Germany better access to these resources from India.

• Skilled Labor: An agreement is planned to make it easier for Indian healthcare workers to move to Germany, helping to address labor shortages that are constraining German economic growth.

Corporate Powerhouses Join the Push

Accompanying Merz is a significant delegation of German business leaders, signaling a strong corporate interest in the Indian market. The group includes the CEOs of major corporations such as Siemens, DHL Group, Infineon Technologies, Uniper, and Airbus Defence and Space.

Managers from Germany's "Mittelstand"—the small and medium-sized enterprises that form the core of the country's manufacturing sector—are also part of the delegation. Additionally, the presence of senior managers from Boehringer Ingelheim and ThyssenKrupp Marine Systems highlights a specific push to deepen cooperation in the pharmaceutical and defense industries.

The Push for a Landmark Submarine Deal

A central focus of the defense talks is a massive submarine manufacturing deal valued at a minimum of $8 billion, which would be New Delhi's largest-ever defense agreement.

Germany’s Thyssenkrupp Marine Systems GmbH and India's state-owned Mazagon Dock Shipbuilders Ltd. are negotiating the specifics. According to sources familiar with the matter, the deal would involve a significant technology transfer for submarine production in India.

India's navy currently relies on about a dozen aging Russian submarines alongside six newer French models. Germany views this deal as a strategic opportunity to reduce India's long-standing dependence on Russian military hardware. However, it remains uncertain if the final agreement will be announced during Merz's visit.

Broader Trade and Geopolitical Context

Beyond specific deals, Merz is expected to use the meeting to accelerate negotiations on a free-trade agreement between the European Union and India. Negotiators are working to finalize a deal before EU President Ursula von der Leyen's visit to India later in January, though talks have reportedly stalled on key issues like steel and automobiles.

As the fastest-growing economy in the G20, India is a vital economic partner for Germany in the Indo-Pacific. The economic ties are already substantial:

• Over 2,000 German companies currently operate in India.

• More than 700 Indian companies have investments in Germany.

• Bilateral trade volume stands at nearly $50 billion, making Germany India's most important partner in the EU.

The discussions will also likely address India's relationship with Russia, especially following the 2022 invasion of Ukraine. While India increased its oil purchases from Russia after the invasion, it has recently reduced its buying following U.S. sanctions on Russian energy producers.

To conclude his trip, Merz plans to visit a Bosch facility in the technology hub of Bangalore on Tuesday.

Crude oil prices extended gains for a third consecutive day, driven by escalating protests in Iran that have sparked fears of a potential supply disruption from OPEC's fourth-largest producer. Brent crude futures pushed toward $64 a barrel following a nearly 6% surge over the prior two sessions, the largest two-day gain since October. West Texas Intermediate (WTI) traded near the $60 mark.

US and Iran Exchange Warnings

The situation has drawn international attention, with U.S. President Donald Trump warning of repercussions if Iranian authorities move against the demonstrators. In response, Tehran has cautioned the United States and Israel against intervening in its internal affairs, heightening geopolitical risk in the region.

Supply Glut Fears Ease Amid Disruption Risk

The potential disruption to Iran's daily oil exports, which total nearly 2 million barrels, is shifting market focus away from concerns about a global supply glut. This oversupply had previously weighed on prices and fueled bearish sentiment among investors.

Options Market Signals Bullish Turn

The new supply risk is clearly visible in the options market. The premium for bullish call options on U.S. crude futures has risen sharply, reaching its highest level since July. This indicates that traders are increasingly betting on higher prices in response to the instability.

Iran Protests Overshadow Venezuela's Woes

Developments in Iran have also diverted attention from the ongoing crisis in Venezuela. While President Trump signed an executive order on Saturday to protect Venezuelan oil revenue in U.S. Treasury accounts from the country's creditors, significant political uncertainty continues to threaten the investment needed to sustain its oil production.

The U.S. State Department has issued an urgent warning for American citizens to depart Venezuela immediately, citing a volatile and unpredictable security environment across the South American nation.

This advisory follows a high-stakes U.S. military operation in Caracas last week that resulted in the capture of Venezuelan leader Nicolás Maduro and his wife, Cilia Flores. Both have since pleaded not guilty to a series of federal charges, including narco-terrorism, in a New York court.

Level 4 'Do Not Travel' Advisory in Effect

Venezuela remains under a "Level 4: Do Not Travel" advisory, the highest warning level issued by the U.S. government. The State Department points to severe risks for Americans, including:

• Wrongful detention and torture

• Kidnapping and terrorism

• Arbitrary enforcement of local laws

• Violent crime and civil unrest

• Poor health infrastructure

The advisory specifically highlights reports of armed militias, known as "colectivos," establishing roadblocks to search vehicles for any signs of U.S. citizenship or affiliation.

Even with the resumption of international flights, officials are urging Americans to remain vigilant, be aware of their surroundings, and exercise caution on the roads. The U.S. government has reiterated that it cannot provide any emergency services to its citizens within Venezuela.

A Backdrop of Military and Economic Pressure

The travel warning comes amid a broader pressure campaign by the Trump administration against drug cartels and the socialist regime in Venezuela.

U.S. military initiatives include:

• Operation Southern Spear: Launched in September 2025, this operation involves strikes against vessels in the Pacific and Caribbean suspected of transporting drugs. Officials report that over 100 alleged narco-terrorists have been killed.

• Operation Absolute Resolve: This targeted overnight raid on January 3 led to the capture of Maduro and his wife without any American casualties.

In addition to military action, the U.S. has imposed sanctions on oil tankers moving to and from Venezuela. On Friday, the U.S. seized an oil tanker in the Caribbean Sea as part of this enforcement.

Oil, Investment, and a Diplomatic Opening

Days after Maduro’s capture, President Trump announced that the United States would receive between 30 and 50 million barrels of previously sanctioned Venezuelan oil.

"This Oil will be sold at its Market Price, and that money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States!" Trump stated on Truth Social.

The president has directed Energy Secretary Chris Wright to implement this plan and has also said that oil companies are expected to invest at least $100 billion to rebuild Venezuela's oil infrastructure and increase production.

Figure 1: The U.S. Embassy in Caracas, which has been closed since 2019, may reopen as officials explore reestablishing diplomatic ties.

Despite the heightened tensions, both the U.S. and Venezuela have indicated they are exploring the possibility of restoring diplomatic relations. An American delegation recently visited the country to assess the potential reopening of the U.S. Embassy in Caracas. The embassy was closed in 2019 after the United States declined to recognize Maduro as the country's legitimate leader following allegations of election fraud.

Despite facing heavy United States sanctions on its energy exports and bombings by Israel, Iran has been producing oil at record levels. By building strong partnerships with China and other global powers, Tehran has successfully sidestepped sanctions to keep its crude flowing—a trend expected to continue into 2026.

However, a new geopolitical shockwave threatens this stability. The recent U.S. military intervention in Venezuela could make Iran's trading partners increasingly wary of buying sanctioned crude, potentially undermining its export growth.

Iran's Enduring Role in Global Energy

While years of sanctions have diminished its former influence, Iran remains a major force in the global energy market. The country’s powerful position is built on vast natural resources.

• Oil Reserves: Fourth-largest proven oil reserves in the world, holding about 9% of the global total, surpassed only by Venezuela, Saudi Arabia, and Canada.

• Natural Gas: Second-largest proven natural gas reserves, accounting for 17% of the world's share.

• OPEC Status: The third-largest crude producer and fourth-largest exporter within the organization.

Washington first reinstated sanctions on Iran in 2018 during President Trump's first term. Since beginning his second term in January of last year, Trump has rolled out several new rounds of sanctions targeting Iranian oil.

Production Ramps Up Against the Odds

At its peak in 1974, Iran was producing over 6 million barrels per day (bpd) of crude. Although years of war and conflict have lowered its capacity, the country has steadily rebuilt its output despite the sanctions regime. Production has climbed from around 2.9 million bpd in 2019 to an estimated 3.2 to 4 million bpd in 2024.

This resurgence is driven by two key factors: lax sanctions enforcement by the United States and Iran's persistent efforts to circumvent the restrictions. This strategy has allowed the nation to re-emerge as a major crude exporter, with one country in particular providing a crucial lifeline.

The China Lifeline: A Key Market for Sanctioned Crude

China, the world's largest oil importer, has become the primary destination for Iranian crude. In the first half of 2025, Iranian oil made up around 13.6% of China’s total purchases.

According to Kpler data, China buys roughly 90% of all oil shipped from Iran, averaging about 1.38 million bpd in the first half of last year. Tehran has successfully attracted Chinese buyers by offering its crude at steep discounts of up to $7 to $8 a barrel below global benchmarks—a tactic also used by Russia to move its sanctioned energy supplies.

The main buyers are China's independent refiners, known as "teapots," which are concentrated in Shandong province and account for about a quarter of the country's refining capacity. In contrast, China's state-owned oil companies have largely avoided purchasing Iranian crude due to the sanctions. In December, these teapot refiners increased their purchases of Iranian oil from bonded storage and offshore tankers after new import quotas were issued in November.

While the Trump administration has penalized three Chinese independent refiners for importing Iranian crude, Beijing continues to reject unilateral sanctions and defends its trade with Tehran as legitimate.

Economic Strain Despite Export Boom

Even with rising oil exports, Iran's economy is in distress. A former senior Iranian oil official highlighted a core issue: "Even if export volumes increase, the key problem is the repatriation of revenues, which faces numerous obstacles. This lack of oil revenue repatriation, despite higher export volumes, puts Iran's economy at risk of bankruptcy."

The economic indicators are grim. Iran's currency has collapsed, and the country faced a headline inflation rate of 42.2% in December. In response to unsustainable subsidies, the government was forced to increase gasoline prices for certain vehicles, sparking widespread protests across the country.

Geopolitical Shockwaves from Venezuela

The U.S. military intervention in Venezuela on January 3rd, which involved the capture of President Maduro and his wife, has intensified geopolitical uncertainty. The unilateral action has raised questions about whether Washington might intervene similarly in Iran. President Trump has suggested that U.S. military action could also extend to Colombia and Mexico. In response, Iranian officials have warned that U.S. troops could be targeted if America intervenes in Iran's protests.

This development is set to shift global oil trade in 2026. Like Iran, Venezuela is a major oil producer under U.S. sanctions, and both China and Iran have bypassed these restrictions to purchase Venezuelan crude. The recent military action may now prompt Chinese refiners to reconsider their reliance on Iranian crude in the coming months, though any concrete shift has yet to materialize.

Demonstrators gather in Washington, D.C., on January 10, 2026, to show support for nationwide protests in Iran.

As major anti-government protests sweep across Iran, a sharp debate is unfolding in Washington over the best course of action for the United States. Key lawmakers from both parties are questioning the wisdom of military intervention, even as President Donald Trump keeps the option on the table.

The situation has triggered diverse reactions among senior U.S. senators:

• Senators Rand Paul and Mark Warner are urging caution, warning that military strikes could backfire.

• Senator Lindsey Graham is advocating for a muscular approach to destabilize the Iranian regime.

• Warner suggests that diplomatic pressure, backed by international allies, is a more prudent path.

Bipartisan Caution on Military Intervention

On Sunday, prominent senators from both Republican and Democratic parties expressed skepticism about using military force against Iran. They argued that such a move could inadvertently strengthen the current regime by unifying the Iranian populace against a foreign aggressor.

"I don't know that bombing Iran will have the effect that is intended," Republican Senator Rand Paul stated on ABC's "This Week."

Democratic Senator Mark Warner echoed this sentiment on "Fox News Sunday," warning that a military strike could risk uniting Iranians against the U.S. "in a way that the regime has not been able to." Warner pointed to history, arguing that the U.S.-backed overthrow of Iran's government in 1953 ultimately paved the way for the rise of the Islamic regime in the late 1970s.

The domestic turmoil in Iran has been described as the most significant in years, leading the Revolutionary Guards to blame the unrest on terrorists while vowing to protect the existing system.

Graham Calls for Aggressive US Stance

In stark contrast, Republican Senator Lindsey Graham advocated for a much more aggressive strategy. A well-known foreign policy hawk, Graham urged President Trump to take decisive action to support the protesters and intimidate the Iranian government.

"If I were you, Mr. President, I would kill the leadership that are killing the people," Graham declared on Fox News' "Sunday Morning Futures." He added that Trump "needs to embolden the protesters and scare the hell out of the [Iranian] regime... You've got to end this."

His comments reflect a push for direct intervention aimed at collapsing the current power structure in Iran.

Trump Weighs Options Amid Escalating Tensions

The debate comes as President Trump is reportedly considering his next steps. According to The Wall Street Journal, military and diplomatic officials are scheduled to brief the president on Tuesday about a range of options, including potential cyberattacks and military action.

In response to the threat of American intervention, Iran has stated it would target U.S. military bases if an attack occurs.

Exiled Prince Eyes Return to Lead Transition

Meanwhile, a prominent opposition figure is preparing for a potential political shift. Reza Pahlavi, the U.S.-based son of the shah ousted in the 1979 revolution, announced Sunday that he is ready to return to Iran and guide a transition to a democratic government.

"I'm already planning on that," Pahlavi said on "Sunday Morning Futures." "My job is to lead this transition to make sure that no stone is left unturned, that in full transparency, people have an opportunity to elect their leaders freely and to decide their own future."