Gold prices are on the rise, reaching near the $2,653 level today, Monday, due to the escalating tensions in the Taiwan Strait. China’s military drills in the area have raised concerns internationally, leading investors to turn to gold as a safe haven. This increase in demand for gold is driven by the ongoing tensions between China and Taiwan, as well as the escalating situation in the Middle East. Geopolitical crises often lead to a surge in gold prices, as investors seek stability and security during uncertain times.
The recent fiscal stimulus announced by China is also supporting the rise in gold prices. China is a major market for gold, and any measures taken to boost its economy have a direct impact on global demand for the precious metal. China’s Finance Minister unveiled a stimulus package over the weekend aimed at addressing local government debt and providing additional support to the slowing economy. This is expected to increase the demand for gold in China, potentially pushing prices to new highs if the stimulus continues to have a positive effect on the economy in the medium term.
Gold (XAU/USD) is currently approaching a key resistance level at the upper end of its multi-week range between $2,660 and $2,670. Breaking through this level could signal further gains in the future, as it represents a significant psychological and technical barrier for investors. This critical resistance point will likely play a crucial role in determining the direction of gold’s movement in the coming period, especially given the escalating geopolitical tensions and various economic policies that are supporting the market trend.
In addition to geopolitical tensions, the global trend of lowering interest rates is also contributing to the rise in gold prices. The European Central Bank is expected to announce a new rate cut at its upcoming October meeting, leading to expectations of more liquidity in the market and supporting the prices of stable assets like gold. This monetary easing cycle is being adopted by central banks around the world, with the Federal Reserve in the U.S. also expected to implement another interest rate cut in November. This move would add pressure on the dollar and further support gold prices.
As inflation rates in the U.S. show mixed results and central banks continue to ease monetary policy, the demand for gold as a reserve asset that preserves value in times of market and currency volatility is increasing. The markets are responding swiftly to these developments, with the probability of a 25-basis-point rate cut by the Federal Reserve rising to 90%. These expectations highlight gold’s role as an alternative asset in the face of potential declines in bond yields and bank deposits.
Overall, gold prices are expected to continue rising in the coming period, supported by factors such as geopolitical tensions, Chinese fiscal stimulus, and global monetary easing. If gold manages to break through the key resistance level between $2,660 and $2,670, further gains could be seen in the medium term. Despite short-term fluctuations, the overall trend points to an upward trajectory for gold prices as long as current conditions persist. Gold remains a safe choice for investors amid economic uncertainties, and its value is likely to increase as global tensions persist and economic policies in China play a crucial role in shaping demand for the precious metal.
