Gold prices climbed to a fresh 15-month high on Monday May 2, in holiday-thinned trade at US$1,303.60/oz., its strongest showing since January 2015, as a retreat in the US dollar drove prices higher, though it later eased back below US$1,300/oz. The precious metal is now up about 22% YTD, well in advance of bonds and most other major asset classes. Safe-haven demand amid nervous world stock markets, a weakening dollar and chart-based buying are helping drive prices. Gold's traditional virtues remain unchanged as a store of value, liquidity and a refuge in times of economic uncertainty. From 1990 to 2005, gold floundered around US$400/oz. or below, then from 2005 in a bull run it rose to above $1,800/oz. in 2011, then declined to touch US$1,050/oz. in late 2015. Since then, it has risen dramatically breaking US$1,300/oz. on May 2. No doubt, everyone is thinking: "are we in a gold bull run similar to 2005"? While gold appears to defy the ability to forecast prices, it does appear to respond to investor sentiment seeking safe haven from world financial or political events. There is a reasonable correlation, however: from 2005 through 2011 the gold bull run coincided with the commodity super-cycle upswing and the subsequent downswing from 2011. It may also be happenstance that the upsurge in many metal commodity prices 2016 YTD also coincided with gold's 22% upsurge; only tin and iron ore showed better gains. Gold demand is largely affected by jewellery purchases and investment. Jewellery consumption, particularly in China and India, used 57% of the 4,212 tonnes produced in 2015. Technology used less than 10%, while investments, ETFs and central bank purchases accounted for the remainder. Along with negative interest rates, commodity analysts at Capital Economics note that gold currently benefits from a weaker U.S. dollar; however, they warned that the market could be over-extended at current prices. The UK firm has been fairly optimistic on gold since the start of the year, expecting prices to end 2016 around US$1,350/oz. Others say the key factor determining the gold price direction is when the US Federal Reserve might shift monetary policy and tighten rates. "The global markets have a very unsettled feel," Kitco's Peter Hug said. "The Chinese manufacturing data showed some slowing and brought back worries that the world’s second-largest economy has not yet returned to stronger growth." RBC Capital Markets has increased its 2016 average gold price assumption from US$1,150/oz. to US$1,250/oz. and its 2017 forecast from US$1,200/oz. to US$1,300/oz. A more dovish posture from the Fed, declining real rates and improving fundamental demand for physical gold have led to a more positive outlook for the precious metal. There are a number of positive demand catalysts, including steady fundamental demand from China and India, systematic central bank purchases, and US inflows into the physical gold ETFs. RBC thinks there is a possibility of a repeat of the 2005 bull run, as they stated: “This later trend is reminiscent of the fundamental investment demand observed from 2005 to 2007.” (Written by Peter Jones, Executive Vice President, Century Global Commodities Corporation)