A Happy New Year to you (even though markets don’t appear overly jubilant at the time of writing).

Investors apparently have had enough merry-making and are getting down to business on this first trading day of 2021. After all, there are a few key events that could trigger heightened market volatility this week.

US political risks may prompt pause in stocks rally

S&P 500 futures are holding steady during the Asian morning session, after the benchmark index registered a new record high on 31 December 2020. Still, some apprehension may creep into equity markets as investors await the official outcomes of the Georgia Senate runoffs on Tuesday.

One only has to revisit the declines in the S&P 500 leading up to the Nov. 3 elections as a reminder that markets generally do not delight in political uncertainty.

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Gold breaks out of downtrend

Gold bulls are however starting off the new year on the right foot, as the precious metal broke meaningfully above the psychologically-important $1900 level for the first time in nearly two months.

The weaker US Dollar, which is expected to be a prolonged theme in 2021, has allowed Bullion to breach the upper bounds of its recent downtrend.

From a fundamental perspective, Gold’s role as a hedge against inflation is buffered as the Federal Reserve maintains its ultra-accommodative stance, coupled with expectations for bigger incoming US fiscal stimulus, especially if Democrats garner enough political muscle after the Georgia Senate runoffs. With a key momentum indicator (MACD) pointing north, Gold prices may seek to be restored to its 2020 glory days, fueled by investors attempts to hedge against the expected overshoot in US inflation.

Oil edges higher ahead of key OPEC+ decision

Today’s OPEC+ supply decision however is of more immediate importance for Oil investors, as the alliance of major producers gather to decide whether to increase their output in February. After having raised their collective production by 500,000 barrels per day (bpd) at the start of 2021, OPEC+ has to ascertain today whether the global economy is ready to absorb more of its supplies next month.

The alliance not only has to contend with an uncertain global economic outlook, but also competing interests within the group. Some need Oil prices to push even higher from current levels by way of keeping output unchanged while allowing the global economy to recover. Others are more concerned about being to sell more of their Oil to gain some much-needed income and market share as they’re already comfortable with where prices are at currently.

In short, OPEC+ must tread carefully or risk unwinding some of the the near-170 percent gains in Brent that have been recorded since April.