After falling 10.4% in 2015 to end the year at $1,061.30, gold has recovered almost all of those losses and is currently trading at seven month highs around $1,189.26 an ounce, 12% higher than at the start of the year.
And, perhaps more importantly, it is flirting with the $1,200 level which is seen by traders as a significant psychological level.
So, what is going on?
The cynical will point out that gold had a similarly bullish start to 2015, rising as much as 12% in January, before stumbling.
Those with a slightly more charitable view of the yellow metal will argue, as UBS strategist Joni Teves does, that current macro conditions are supportive of the metal, particularly recent dollar weakness and the stress seen across credit markets.
“Despite likely gains in positioning of late, that the market is coming from a low base should offer investors comfort that there is room to rebuild. We think gold deserves credit for its year-to-date performance and a $1200+ price tag should be achievable,” she said in a note out on Tuesday.
But, she added, the latest gain does raise the risk of the market getting ahead of itself.
“The pace and magnitude of gold’s ascent over the past week or so suggests that the potential for a near-term correction or consolidation of recent gains is becoming elevated. Market participants are likely to be particularly hesitant ahead of a key event such as the Fed Chairwoman, [Janet Yellen’s] semi-annual monetary policy testimony to the House and Senate this week.”