Gold finished higher in light action on Monday, as many investors were off for the Columbus Day Holiday. The weekend was, however, filled with action that could potentially impact gold and financial markets, and the buying seen in gold Monday was likely based on safe haven demand.

Over the weekend, thousands of Spaniards protested the recent vote by Catalonia to be independent. Although the events in Spain may not have a direct effect on the U.S. or Canada, they may be a cause for concern. Catalonia represents a significant portion of the Spanish economy-about 20 percent-and if the region does in fact break away from Spain, the resulting economic consequences could be significant.

The vote by Catalonia is just another example of troubles in the EU, and the region will likely continue to face some serious challenges. The potential for other members to withdraw, like Great Britain has, as well as some ongoing banking system troubles and high debt levels could weigh on economic activity in the region.

The U.S. and Turkey over the weekend got into a significant spat over visas, after a U.S. consulate staff member was arrested in Istanbul.  The U.S. froze Turkish visas over the issue, and Turkey responded by doing the same. The freeze effectively blocks travel to the U.S. for Turks, and travel to Turkey for U.S. citizens with few exceptions.

As if these issues were not enough on the geopolitical front, the ongoing war of words between the U.S. and North Korea also continued over the weekend. President Trump has once again hinted at military action, and other nations now appear to be drawing up plans in case war does break out. The threat of a nuclear conflict has not been this serious since The Cold War, and another missile test by the north could potentially draw a military response from the U.S. and its allies.

Although gold has lost ground in recent weeks, the metal is not likely to fall too far given the geopolitical backdrop. In fact, a serious escalation with North Korea could potentially fuel a massive rally in gold and other perceived safe haven asset classes.

Stock markets have thus far maintained their almost indifferent attitude to the potential for war with North Korea, although that could change in a hurry. Currently, stocks are not showing any significant signs of slowing down, and there seems to be increasing talk of another major leg higher in equities before the rally eventually comes to an end.

Markets have a tendency, however, to do the opposite of what is widely expected. Although the current stock bullishness may not have reached euphoric levels yet, the market could be getting closer to the point at which there is simply no one left to be long. Markets have an uncanny way of sucking in every last investor before turning-and turning hard-and the stock market could be drawing in the final wave of investors with every fresh, record close.

The gold market may remain somewhat range-bound in the absence of any fresh geopolitical catalyst. Once stock markets start to reverse, however, the market could see massive capital inflows that could fuel a protracted bull market.