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Gold is back in vogue with investors, but the question is, does this rally have legs?

Gold bars featuring illustrations of monkeys in Hong Kong. Gold is back in vogue as investors seek out a safe haven amid growing global volatility.

Gold has returned in vogue as investors seek out a secure haven amid growing global volatility.

The question is whether this gold rally will have legs, or whether or not this will fizzle out like numerous others over the past couple of years.

The precious metal is incorporated in the midst of a tremendous upward move, jumping 18 percent because the start of 2016. The important thing gold futures contract rose by a whopping US$53.20 an ounce on Thursday alone, bringing it to US$1,247.80. Gold’s performance this year may be the polar complete opposite of most other commodities, which are down sharply.

Gold’s surge comes as global equities tumbled into a bear market. On Thursday, stock indexes worldwide fell on fears within the health from the global economy and banking sector, with MSCI’s world stock index dropping to more than 20 per cent below its peak, while safe-haven 10-year Treasury yields hit their lowest since 2012.

Several factors are working in gold’s favour: Along with wobbling markets, central bank gold buying is on the rise and also the U.S. dollar is weakening as investors are increasingly doubtful that the Fed will raise interest rates just as much or as soon as previously assumed. Those doubts gained steam after chairman Janet Yellen’s remarks to Congress now, by which she took a cautious tone on the economy.

Over the past few years, the consensus view from Goldman Sachs and other Wall Street banks was that U.S. rate of interest hikes were imminent and were poised to crush the gold price. That drove many generalist investors out of the market, and they are just starting out to take an interest again.

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