The gold market searches for explanations regarding the abrupt surge in bullion prices.

The recent surge in gold prices to all-time highs appears straightforward at first glance, attributed to the tumultuous geopolitical climate and uncertain global economic outlook. Gold, renowned as a “safe haven,” typically sees an increase in demand when interest rates decline—an expectation held by many investors anticipating rate cuts later this year.

However, upon closer examination, the reasons behind gold’s sudden rise are not so clear-cut. Despite trading within a relatively stable range for months, bullion experienced a significant spike in early March, rallying by 14% since then and setting numerous daily records. Geopolitical tensions have persisted for extended periods, and the timing of potential rate cuts by the Federal Reserve has become increasingly ambiguous in recent weeks. So, what has prompted this change?

Seasoned executives and analysts offer diverse explanations for gold’s unprecedented ascent: Is it a central bank expressing concerns about the dollar’s role as an economic weapon? Are investment funds speculating on an impending pivot by the Federal Reserve towards lower interest rates? Could it be a surge in algorithmic trading activity drawn to gold simply because of its upward momentum? Perhaps stubborn inflation and fears of an economic downturn are driving forces? Or is it the depreciation of currencies and looming elections? The answer may lie in a combination of these factors.