Ross Norman, CEO of Metals Daily, stated that although many traditional drivers of gold do not exist, the price of gold is still rising, and the insensitivity of opaque buying to prices means that the price of gold may soon rise again.

Norman said that gold has long been a "topic of interest" for investors, but its recent rise is indeed puzzling.

He recently wrote, "Gold has always been driven by a complex network of economic, geopolitical, and market forces, but perhaps the most appropriate description is' the sum of all concerns. 'However, the dynamics that typically come into play are now unpredictable, making the gold market particularly difficult to understand. First of all, the sustained bull market in gold seems to ignore many of its traditional correlations, prompting analysts to ask: why

Norman pointed out that the traditional correlation and indicators of gold cannot explain its increase.

He said, "Gold has traditionally been seen as a hedge against inflation, and as inflation rises, gold prices tend to rise as well. Although this pattern holds true in the long run, its performance in the short term is unexpected. In 2024, as Western inflation rates rapidly decline, gold will accelerate its rise instead of slowing down as people expected

Gold has a strong inverse relationship with the US dollar; When the US dollar strengthens, gold usually weakens. He said, "However, in 2024, the US dollar and gold will rise together, which is unusual and violates historical conventions

There is also a strong inverse relationship between gold and US bond yields, as investors tend to choose high-yielding bonds over gold when yields are high. However, in 2024, gold and US Treasury yields have been fluctuating synchronously, indicating that traditional relationships are being ignored

He said, "In short, gold has deviated from almost all expected normalcy

The relationship between gold and silver also goes against historical trends. He wrote, "Historically, during periods of bullish sentiment in the precious metal sector, silver has often outperformed gold. However, the surge in the gold to silver ratio indicates that silver has performed poorly and has been largely overlooked in this round of gains. This is a dog that doesn't bark

Despite the historically high gold prices, the demand for gold in Asia remains astonishingly strong, which is also unusual. He said, "Asian buyers have traditionally been highly sensitive to price changes, especially in jewelry products where profit margins are very low and there is almost no room for price increases. But this time, even though the gold price calculated at domestic prices has reached a historical high, they are still active participants

Norman gave three possible explanations for the unusual behavior of this yellow metal.

He said, "There is a theory that after centuries of reliable and predictable performance, the correlation between gold and other assets is no longer as we thought. Another theory is that we are witnessing a paradigm shift in the gold market, which is less driven by Western economic considerations. The third and perhaps most convincing theory is that behind the surge in demand is a large and opaque participant, whose purchase volume is very high enough to distort the market

He said that the view that gold is no longer related to other assets seems unlikely. These correlations have a logical basis, although they may be temporarily overturned as we see now

He did not completely reject the "paradigm shift" theory, he said, perhaps because Western market participants have not fully understood the impact of Asia's rise to dominance in the metal industry so far.

He said, "Asian countries are both the largest producers and consumers of gold, so the influence of the East on price discovery may be increasing, somewhat like a strong magnetic field. That is to say, to understand gold, people need to look at it from the perspective of Asian investors, rather than from the perspective of Westerners. Of course, the reasons why Eastern investors buy gold are very sufficient at present, but not so sufficient in the West. It can be affirmed that many of the largest price fluctuations occur during Asian trading hours, so this statement may have some truth. It can be affirmed that many of the largest price fluctuations occur during Asian trading hours, so this argument may have some truth

But Norman said that many analysts tend to lean towards the third theory, which is that "an unknown large participant has driven the recent rise in gold prices

He said, "This can explain why the rise in gold prices seems to cross almost all traditional market correlations

He pointed out that the buying frenzy driving the current upward trend is exceptionally opaque. He said, "Usually, market data such as import and export statistics, warehousing data, and freight rates can provide clues about the source of demand. If you know 'who' is buying, then you can have a good understanding of its quality (strong buyer central bank or short-term speculative behavior?), and thus understand to what extent the upward trend can continue

He stated that only a few buyers with high credibility meet the criteria. Norman wrote, "The gold price has hardly paused in consolidation, let alone profit taking in the past year. As we have seen, the gold price trend ignores traditional unfavorable factors. Buying seems highly concentrated and there are no obvious signs, indicating that it is driven by a strong single entity, whose identity remains a mystery, but its impact on the market is undeniable

Norman provided two possible sources for the 34% surge in gold prices last year.

He said, "One opaque area is the derivatives market. As we all know, in futures exchanges, there are likely to be a large number of leveraged long positions in the over-the-counter market. Because derivatives trading is often unrelated to broader macro events, and if the scale is large enough, it can also bring self fulfilling desires, it meets the requirements. If a speculator buys a large number of gold call options and expects the price to rise, the bank on the other side of the transaction usually hedges by buying about half of the position in the spot market. If the scale is large enough, it will lead to price increases, prompting banks to further hedge and form a feedback loop

He pointed out, "The only obvious aspect of this situation is the spot purchases by purchasing banks, which will lead to more buying, as we have seen

The second potential source is the undisclosed large-scale buying by the central bank. He said, "With the increasing financial sanctions worldwide, and it can be said that the United States under the previous administration has' weaponized 'the dollar and excluded some countries from the international payment system, cautious central banks may be concerned about similar fate. They will sell dollar assets and buy gold because gold has no counterparty risk. In this environment, they will only place orders with major refineries, so it can be said that price is not particularly important. This also meets the conditions

Norman said, "Currently, both situations can happen simultaneously. If you can judge a person's personality based on their performance in adversity, then metals are no exception. Gold, on the other hand, is currently characterized by an unusually insensitivity to a wide range of economic events... as well as continuous buying

Looking ahead, Norman said that gold's outstanding performance at the beginning of this year makes it more likely to consolidate for a period of time. He said, "The gold price has already reached a historic high of $2955 twice in February 2025, and most of our expectations for the first six months were realized in just six weeks

Norman concluded, "The current bull market is intact, but the momentum has weakened and gold has fallen below its trading channel... This is not a bad thing. Gold needs a period of consolidation, which will provide greater momentum for future increases. At the same time, we need to adjust our views on the 'fair value' of gold in the real or physical market, and you can be sure that we will soon return to competition