GOLD PRICES SURGE TO RECORD HIGHS: WHAT IS DRIVING THE RALLY?

Gold prices have surged since the end of February, with the LBMA Gold Price PM currently trading at US$2,180.45 per ounce as of March 11th. This marks a 6.5% month-to-date increase. Gold has achieved record highs for six consecutive days and came close to reaching US$2,200 per ounce during intra-day trading last Friday, March 8th.

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The significant rise in gold prices has garnered attention from market participants. Initially, the catalyst was attributed to a weak ISM print in the US on March 1st, which resulted in a decline in bond yields and the US dollar.

However, while this factor provides some explanation, there are other drivers behind gold's recent movement. Analysis conducted using a weekly version of the Gold Return Attribution Model (GRAM) suggests that several factors contribute to gold's performance:

1. Weakness in the US dollar against both developed and emerging market currencies.

2. Increased market volatility.

3. More bullish investor positioning in the COMEX market.

4. A decrease in 10-year US Treasury yields.