Gold Keeps Hitting Records and ‘Not Everything Adds Up.’ What’s Moving Prices

The price of gold continued to march upward on Thursday, set for the fifth straight day of record highs—and it’s not just the U.S. economic backdrop and Federal Reserve policy expectations boosting the yellow metal.

Front-month contracts for gold traded in New York rose some 0.1% on Thursday, trading as high as $2,153 per troy ounce, a record level. One of the most frequently cited reasons for gold’s recent rally is confidence among traders that the Fed will cut interest rates in the coming months. This trend has weighed on Treasury yields and the dollar, and would also typically boost gold because lower short-term rates make the precious metal—which has no yield—look more attractive.

“Gold continued flying, hitting a record high today, perhaps as it received extra support from the dollar’s weakness and the retreat in Treasury yields,” said Charalampos Pissouros, an analyst at broker XM. “However, gold’s rally appears to be disproportionate to the reaction in the dollar and yields.”

Indeed, often-stodgy gold’s tear higher—prices are up more than 5% in as many days—seems out of sync with this traditional narrative of U.S. monetary policy. That’s especially true because, while expectations of rate cuts have picked up, bets on lower borrowing costs remain far less aggressive than they were a few months ago.

“From a fundamental standpoint, not everything adds up,” UBS Global Wealth Management strategist Wayne Gordon wrote in a Wednesday note. “Gold is clearly being driven by other factors.

Analysts have pointed to numerous other reasons for gold’s rise, which has come despite net outflows from gold exchange-traded funds. Continued buying from central banks—including China—is one factor, as is retail buying of gold, such as in India.

“We believe more technical factors were at play recently, with prices crossing key resistance levels,” wrote Gordon at UBS. “The increasing focus on the U.S. presidential election, ongoing buying by central banks, and still relatively modest speculative positioning signal this rally has further to run over the medium term, particularly if ETF-buying returns.”