Global financial markets began the first trading sessions of the New Year with mild gains but little conviction, reflecting a fragile balance between improving macro data, stretched asset valuations, and rising geopolitical risk. After a turbulent 2025 marked by sharp rotations across asset classes, investors are entering 2026 with a defensive tilt rather than outright risk-on positioning.

The US dollar opened the year holding firm near the 98.5 mark, stabilising after a steep decline of nearly 10 percent over the course of 2025. US equities edged higher in the first session, extending last year’s double-digit gains, but weekly trends painted a more cautious picture. The dollar strengthened on a weekly basis as equities softened, supported by stronger-than-expected US economic data.

Key indicators released late last week showed resilience in the US economy. Home sales improved, home prices remained firm, December Chicago PMI surprised on the upside, and weekly jobless claims fell to a one-month low of 199,000. Together, these data points reinforced the view that growth remains intact, even as inflation pressures gradually ease.

Precious metals opened the year on a strong footing. Gold traded over 1 percent higher near $4,370 per ounce, building on what was its strongest annual performance since 1979. Silver outperformed, rising more than 2 percent to around $73 per ounce, driven by a combination of dollar softness, persistent physical market deficits, and rising industrial demand.

December Federal Open Market Committee minutes added a nuanced policy signal. While US central bank officials expressed increasing openness to easing if inflation continues to moderate, divisions remain over the timing and scale of any rate cuts. Markets are currently pricing in only a 17 percent probability of a January rate cut, underscoring continued uncertainty around the policy path.

Geopolitical tensions also played a role in early-year positioning. US enforcement actions related to Venezuelan oil trade and renewed Russia–Ukraine strikes on energy infrastructure reinforced safe-haven demand across commodities.

Despite the strong start, the previous week told a different story. Gold and silver prices on COMEX retraced sharply as investors locked in profits after extraordinary rallies. Gold fell nearly 5 percent to below $4,330 per ounce, while silver dropped over 8 percent to around $71, retreating from a record high of $82.67.

Part of the correction was technical. Higher margin requirements imposed by exchanges forced leveraged long positions to unwind, accelerating the pullback. This episode highlighted how crowded positioning had become toward the end of 2025.

In India, MCX Gold futures reflected this volatility. Prices recorded their steepest single-day fall in nearly two months, dropping about 3.6 percent at the start of the week. Since then, prices have largely moved sideways, indicating consolidation rather than a trend reversal. Technically, holding above ₹1,34,300 per 10 grams remains critical. A sustained move below ₹1,33,200 could open the door to further correction, while stability above support may allow a rebound toward ₹1,38,700.

Base metals began the year with notable strength, extending year-end momentum amid volatile trading conditions. Copper led gains, settling above $12,450 per tonne after briefly testing record highs. Aluminium and zinc rose more than 1 percent, with aluminium breaking above $3,000 per tonne for the first time since 2022. Early strength on MCX and Shanghai exchanges spilled over into LME trading after holiday reopenings, suggesting coordinated global demand signals.

Crude oil prices also opened 2026 on a positive note, with WTI closing the week near $57.3 per barrel. This comes after oil fell nearly 20 percent in 2025, its steepest annual decline since 2020, driven largely by oversupply concerns. Markets are now focused on the upcoming OPEC+ meeting scheduled for January 4, where producers are widely expected to maintain the current pause on further supply increases.

Market nerves intensified over the weekend following reports that US forces captured Venezuelan President Nicolás Maduro and his wife, charging them with drug trafficking after a major military operation. If confirmed, the development represents a significant geopolitical shock. Venezuela holds the world’s largest proven oil reserves, and any prolonged disruption could materially affect global supply dynamics.

This escalation is likely to sharply boost safe-haven demand for gold and silver while pushing oil prices higher amid fears of supply interruptions. Asian and Indian markets are expected to open on edge, with volatility likely elevated.