Gold prices are on the rise, recovering from two-week lows in early Monday trading. The US holiday has resulted in thin market conditions, providing support for buyers.
China’s Economic Prospects and Geopolitical Tensions Boost Gold Prices
Renewed optimism regarding China’s economic growth and escalating tensions between Israel and Hamas are contributing to the ongoing increase in gold prices.
According to Reuters, China has launched a new state-backed investment fund with a registered capital of 344 billion yuan (CNY) aimed at boosting the semiconductor industry. This initiative is expected to stimulate economic recovery, positively impacting gold prices as China remains the world’s largest consumer of gold.
In addition, safe-haven investments in gold have surged following reports from CNN that Israeli airstrikes on a camp for displaced people in Rafah killed at least 35 Palestinians and injured dozens more on Sunday. Ceasefire negotiations between Israel and Gaza have stalled but are scheduled to resume next week.
However, it remains uncertain whether gold prices can maintain their upward momentum. Market expectations for interest rate cuts by the US Federal Reserve (Fed) this year have been reduced. Additionally, thin liquidity, due to the UK and US markets being closed for the Spring Bank Holiday and Memorial Day, could amplify gold price fluctuations.
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