The central banks have bought gold at a rate not seen since World War II with regard to geopolitics, and the strong dollar sees a shift in appreciation of the distinctive risk-free asset.
A wide combination of factors has led to the gold's resurgence, according to research firm Bernstein. They include geopolitical risk, concerns about government debt, supply problems and the perception that gold provides better returns over other assets.
"In addition to just the threat of inflation, it is also noteworthy that for the first time since Bretton Wood's conclusion and since the end of World War II, central bank purchases of gold have actually increased," a note sent to clients from the company said Monday.
Likewise, the case of gold purchases has been strengthened by the close record levels of US government debt making other potential risk-free assets more dubious and may increase inflation rates.
Gold trades at $ 1,310 per ounce, which is nearly 10% higher than last September.
In addition to its value related to inflation, gold is likely to see the rise in demand, while supply will remain "flat at best," Bernstein says, adding value to both central banks and investors. "As with any other item, robust demand and weak supply require price increases," wrote Bernstein's analysts.
Gold companies had been declining for years, but have recently seen a clear boost.
Bernstein also points out that, in addition to the talk of the central bank's holdings of gold, its increase in use over jewelry. Both private and public "monetary" gold investment has taken over the demand for jewelry as the primary source of demand growth for gold in recent years, Bernstein said.