Petro Reignites Feud with Trump, Blasting US Policy

Gold and silver have kicked off the new year with powerful momentum, testing critical resistance levels despite elevated market volatility. Bullish sentiment has driven gold to $4,500 an ounce, marking a nearly 4% gain since last Friday. Silver has performed even more strongly, nearing $80 an ounce for a weekly gain of almost 10%.

Silver's resilience is particularly noteworthy. The metal has bounced back effectively from a sharp drop last week, which followed a move by the CME Group to raise margin requirements in an effort to curb speculative activity.

Despite the strong start, both precious metals face a significant short-term headwind from the annual rebalancing of major commodity indexes.

The $5 Billion Rebalancing Pressure

Commodity indexes like the Bloomberg Commodity Index (BCOM) and the S&P GSCI Index are preparing for their annual rebalancing, an event that can create temporary selling pressure for top-performing assets.

These indexes hold a basket of commodities, with weightings determined by factors like liquidity and global production.

• Gold: Represents about 14% of BCOM and 3% to 4% of the S&P GSCI.

• Silver: Represents about 9% of BCOM and 1.5% of the GSCI.

Last year’s massive rallies—over 60% for gold and nearly 150% for silver—significantly increased their weightings within these indexes. To bring the allocations back in line, index managers must sell their overweight positions. According to some estimates, this rebalancing will force the sale of roughly $5 billion in gold and silver.

The good news for bulls is that this process is expected to conclude next week. Analysts widely believe that once this technical selling pressure is gone, the broader fundamentals supporting precious metals will reassert themselves, reinforcing the "buy the dip" strategy that proved effective last year.

Silver's Bull Case: A Looming Supply Squeeze

Beyond temporary market mechanics, the fundamental outlook for silver appears exceptionally strong. A classic supply-demand squeeze is tightening its grip on the market as industrial consumption and investor demand compete for dwindling supplies.

The supply side is inelastic; new silver mines cannot be built in a few months to meet the demand surge. While moving silver stockpiles from the U.S. to other markets like London could improve liquidity, it doesn't solve the core problem: there isn't enough silver to satisfy persistent demand. In this environment, expectations are growing that silver prices could easily push past $100 an ounce.

Gold's Role as a Geopolitical Hedge

Gold continues to perform its traditional role as the ultimate geopolitical safe-haven. Analysts note that a U.S. international policy of "might makes right" and the continued weaponization of the economy are pushing nations to diversify their reserves away from the U.S. dollar.

This trend underpins forecasts from many analysts who believe it is only a matter of time before gold prices reach $5,000 an ounce this year.

The Federal Reserve's Inevitable Pivot

The final piece of the bullish puzzle for both gold and silver is the U.S. central bank's monetary policy. While markets do not anticipate the Federal Reserve will cut interest rates later this month, a cooling labor market suggests that rate cuts are inevitable.

For investors, the primary question is not if the cuts will happen, but how steep the decline in rates will be. As we move further into 2026, the one certainty is that it won't be a boring year. Judging by the first week, the volatility is here to stay.

The Trump administration has reversed course on its 11-month effort to defund the Consumer Financial Protection Bureau (CFPB), requesting $145 million from the Federal Reserve to keep the consumer watchdog agency solvent. The move, disclosed in a court filing, comes after a federal judge mandated the funding.

The seal of the Consumer Financial Protection Bureau (CFPB), the agency at the center of a prolonged funding dispute with the Trump administration.

Court Order Forces Reversal on Funding

According to a letter filed in federal court, President Trump's budget director, Russell Vought, has formally requested the funds from the Federal Reserve. This action follows a court decision a month ago that rejected the administration's argument that it was legally prohibited from drawing money from the central bank for the CFPB's budget.

Vought, who serves as both the head of the Office of Management and Budget and the acting CFPB director, stated in a letter to Fed Chair Jerome Powell that he disagreed with the court's order. However, he confirmed the $145 million would be sufficient to fund the CFPB's functions from January to March.

A spokesperson for the Federal Reserve declined to comment on the request. Historically, the Fed has always supplied the funding requested by the consumer agency.

A Setback for Efforts to Dismantle the Watchdog

This funding reversal marks a significant setback for the administration's campaign to dismantle the CFPB. Throughout the year, top officials have pursued strategies ranging from reducing the agency's size to shutting it down completely, accusing it of politicized enforcement that burdens free enterprise—claims that the agency's staff and supporters reject.

The decision is the administration's second recent defeat concerning the CFPB. Last month, an appeals court threw out a previous ruling that would have allowed the agency's leadership to proceed with mass firings.

Lifeline Arrives as Agency Faced Insolvency

The $145 million arrives as a critical lifeline for the CFPB, which was potentially just weeks away from insolvency. The agency had previously informed a judge it could not guarantee sufficient funding to cover its expenses beyond December 31.

The requested amount aligns with the CFPB's average quarterly funding draw over the last decade. While the agency had been drawing down its available finances for nearly a year, its costs are currently lower due to the suspension of most activities and an exodus of workers.

Gold posted a gain this week, with traders continuing to price in two rate cuts overall in 2026. A lower interest-rate environment is a tailwind for precious metals, and last year’s cuts were a factor in bullion’s best annual performance since 1979. Central-bank buying and inflows to exchange-traded funds on the back of the so-called debasement trade also underpinned the precious metal’s scorching 65% rally last year.

Source: Bloomberg

No official word from OFAC

Source: Reuters

U.S. President Donald Trump has confirmed he will meet with Venezuelan opposition leader Maria Corina Machado next week, a pivotal discussion that comes as the U.S. navigates a complex power transition in Caracas.

The meeting is scheduled for January 13 or 14 in Washington, D.C. Speaking to U.S. oil executives on Friday about plans to rebuild Venezuela's oil industry, Trump noted Machado's upcoming visit.

"She's going to come in and pay her regards to our country, really to me, but I'm a representative of the country, nothing else," Trump said. He added that he would also meet with other "various representatives of Venezuela," though these meetings are still being arranged.

A New Political Landscape in Caracas

The meeting occurs against the backdrop of a significant shift in U.S. policy toward Venezuela. Trump and other officials have signaled they will allow Delcy Rodriguez, the former vice president, to remain as the country's interim president for at least 90 days after she took the oath of office this week.

This decision effectively sidelines Machado, whose opposition movement is widely considered the winner of Venezuela's 2025 presidential election over Nicolas Maduro. U.S. Secretary of State Marco Rubio explained the rationale, stating that much of Machado's movement "is no longer present inside of Venezuela."

The political maneuvering follows a dramatic U.S. operation on January 3, when special forces arrested former president Nicolas Maduro and his wife, transporting them to New York to face drug charges. Trump described his current relationship with the remaining officials in Venezuela as "very good."

U.S. Deepens Involvement in Venezuelan Affairs

The United States is actively rolling out a plan for heavy intervention in Venezuela's government and its critical oil sector.

Recent activity suggests a ramp-up of U.S. presence on the ground. Vehicle traffic has notably increased at the site of the U.S. embassy in Caracas, which has been officially suspended since 2019. A former embassy contractor reported being told the facility could reopen as early as next week.

Currently, U.S. diplomatic relations with Venezuela are being managed from Bogota, Colombia, by charge d'affaires John McNamara.

Anti-government protests are escalating across Iran, met by a severe state crackdown that includes an internet blackout and lethal force. As videos of the unrest continue to emerge, U.S. President Donald Trump has issued a stark warning to Tehran's leadership, while Iran's Supreme Leader has accused demonstrators of acting on behalf of the United States.

The growing unrest presents the most significant internal challenge to Iran's clerical rulers in at least three years. The government's response has been swift and severe, cutting off communications and deploying security forces as the death toll continues to rise.

Government Crackdown: Internet Blackout and Force

To curb the spread of information and organize protests, Iranian authorities have shut down internet access across the country. The Ministry of Information and Communications Technology confirmed the decision was made by "competent security authorities" in response to the protests.

The communications blockade has had a widespread impact:

• Phone calls into the country are failing to connect.

• At least 17 flights between Dubai and Iranian cities have been canceled.

• The flow of information out of Iran has been drastically reduced.

Protests have led to widespread destruction, with vehicles set on fire in major cities.

Iranian state television has broadcast images of burning buses, cars, and banks, while the semi-official Tasnim news agency reported that several police officers were killed overnight in clashes.

A Mounting Death Toll and Economic Frustration

The human cost of the crackdown is severe. Iranian rights group HRANA reported on Friday that at least 62 people have been killed since the demonstrations began on December 28, a figure that includes 48 protesters and 14 security personnel.

While the protests initially erupted over a dire economic situation—the rial lost half its value last year and inflation topped 40% in December—they have since evolved. Demonstrators are now chanting political slogans aimed directly at the government, with some verified videos capturing calls of "Death to Khamenei!"

Crowds have gathered in major urban centers, challenging authorities amid a severe economic crisis.

Clashing Narratives: Khamenei vs. Trump

The escalating crisis has drawn sharp words from both Washington and Tehran. On Friday, President Trump delivered a direct threat to the Iranian government. "You better not start shooting because we'll start shooting too," he stated, adding, "I just hope the protesters in Iran are going to be safe, because that's a very dangerous place right now."

In a televised address, Iran's Supreme Leader Ayatollah Ali Khamenei offered a defiant response. He vowed not to back down and accused the demonstrators of being agents for the United States and opposition groups based abroad.

Figure 1: Supreme Leader Ayatollah Ali Khamenei vowed not to back down, blaming the unrest on foreign interference.

"The Islamic Republic came to power through the blood of hundreds of thousands of honourable people. It will not back down in the face of vandals," Khamenei said. This hardline stance was reinforced by Tehran's public prosecutor, who threatened that anyone committing sabotage or clashing with security forces would face the death penalty.

International Reaction and a Fractured Opposition

The violence has triggered condemnation from world leaders. France, Britain, and Germany issued a joint statement condemning the killing of protesters and urging Iranian authorities to show restraint. Similarly, a spokesperson for the United Nations said the organization was "very disturbed by the loss of life," reaffirming the universal right to peaceful demonstration.

Despite his strong rhetoric, Trump has shown caution regarding Iran's fragmented opposition. He indicated on Thursday that he was not inclined to meet with Reza Pahlavi, the U.S.-based son of the late Shah of Iran, suggesting a wait-and-see approach before backing any specific leader.

Alex Vatanka of the Middle East Institute in Washington noted the deep-seated anger fueling the protests. "The sense of hopelessness in Iranian society is something today that we haven't seen before," he said. "That sense of anger has just deepened over the years."

Iran has weathered multiple waves of major unrest in recent decades, including protests in 1999, 2009, 2019, and the "Woman, Life, Freedom" movement in 2022. While authorities suppressed the 2022 protests, which resulted in hundreds of deaths, they have since ceded some ground on public dress codes for women. The current crisis, however, sees the government once again pairing acknowledgments of economic hardship with a violent crackdown on what it labels subversive acts.