Short-term gold price drivers

A multiple variable model featuring the four key thematic driver categories of monthly gold price returns: wealth and income, market risk, opportunity cost and momentum & positioning, themes that capture motives behind gold demand and most poignantly, investment demand; considered the marginal driver of gold price returns in the short-run.

Short term drivers

Data as of

Sources: Bloomberg, World Gold Council; Disclaimer

To understand the gold price return – in the last row of the table - for a given period, sum the component returns above in the appropriate column.

How does this model work?

Gold prices are determined by the interaction of drivers from four key categories: 1) wealth and economic expansion; 2) market risk and uncertainty; 3) opportunity cost; and 4) momentum and positioning.

Our model provides a quantitative attribution of the key factors that have influenced gold’s performance over a given period. Hovering the mouse cursor over the chart generates a windowed summary of the selected period’s return attribution. This information is also displayed in the table below the chart. In addition to the four key categories, the table also lists the portion of the period return that our model did not capture (the residual) . In addition, the table compares the return of gold and its attribution by driver-type during recent periods of time. Users can change the time period that each bar represents: the default is monthly, but it can be expanded to quarterly or half-yearly.

Here is an example for Q4 2016

Driver categories

Drivers of the gold price can be broadly grouped into the following four categories:

  • Wealth and economic expansion: rising income is associated with higher demand for jewellery, technology and long-term savings. The constant in our model captures this driver
  • Market risk and uncertainty: market downturns often boost investment demand for gold as a safe haven asset. In our model, market risk is captured by relative equity/bond flows, implied gold volatility, Federal reserve assets, the price of crude and break-even inflation
  • Opportunity cost: the perceived relative value of competing assets including bonds and currencies influence investor attitudes towards gold. Three variables capture this theme: nominal 10-year Treasury bond yields, a developed market currency index and an emerging market currency index.
  • Momentum and positioning: asset flows and price trends can intensify or diminish gold’s performance. Three variables capture momentum and positioning in our model: The lagged return of gold, ETF flows and COMEX futures positioning.

Length and frequency

Monthly data from 2001 to most recent month available.

Update Schedule

Update monthly.


Returns are displayed as percentages