China's monetary policies boost gold status as inflation rises
China's monetary policies boost gold status as inflation rises
China’s evolving economic landscape continues to play a central role in the global gold market.
Beijing has been navigating economic challenges and strained trade relations, which has led to strategies that could subtly reshape its approach to currency and asset management. As the post-bubble economy tightens, China has increasingly leaned on monetary measures to maintain stability, introducing inflationary policies as a means to stimulate growth. Yet, in the face of rising domestic inflation, political discontent, and a shifting global power balance, Chinese savers have found a reliable hedge in gold—cementing its position as a "sparkling refuge."
Gold is more than just a safe haven for individual investors in China; it’s becoming a strategic asset potentially backed by a “gold bank” network. Speculations are circulating that China could eventually sponsor a gold-backed payment system, strengthening gold's appeal across Chinese-friendly nations that may also face pressures from Western trade policies. With private and government sectors together holding what could amount to 15% of the world’s above-ground gold stocks, China’s move toward a gold-centric financial buffer would not only solidify domestic confidence but could also send ripple effects through global gold markets.
Gold price action stuck in a narrow range
Turning to gold’s price action, we’re seeing an intriguing stall after its October peak at $2,760. Over the past six trading days, gold has been trading within a tight range between $2,760 and $2,710, holding steady as global economic factors play out. This consolidating phase suggests that the market is weighing its next move, with investors closely watching how China’s economic policies could influence demand.
The recent shift in gold’s Relative Strength Index (RSI) from extreme overbought to mid-levels indicates that there might be room for an upward push if demand persists. This moderation in the RSI hints at a potential continuation of the rally, should market sentiment remain buoyant.
Many countries are exploring alternatives to the dollar, and gold has emerged as a key player in this evolving landscape.
