Gold and the greenback have historically been inversely correlated, so when the dollar moves higher, gold tends to suffer, and vice versa. Since the start of the year, the dollar index (DXY) has been struggling to breach the key 100 level, but is only down roughly 1.3%. However, on Wednesday, the DXY managed to post its largest daily loss since early December, which has helped push gold to levels last seen in early November.
Gold, an asset that thrives on uncertainty, has gained more than 6% since the start of 2016 on concerns over the growth outlook, especially in China, after losing 10.4 percent in 2015.
The near-term outlook for gold will be largely influenced by the pace of US interest rate rises. Higher rates would make gold less attractive as it would increase the opportunity cost of holding non-yielding assets.
"I think the main driver we are seeing is the weaker dollar, based on continuing uncertainty about the global economy,"
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