Why gold stagnates
While the gold price may not budge over the next few months, emerging markets have shored up demand.
"A number of things are now adding up to make investors more positive about gold," reckons the World Gold Council's (WGC) Marcus Grubb.
In India, the world's second-biggest importer of gold, restrictions on gold imports look set to be relaxed by the new government. The tariffs and quotas brought in last year have backfired: they have created a boom in illegal gold smuggling and had scant impact on the budget deficit.
Global demand for jewellery climbed marginally in the first quarter, boosted by a 30% year-on-year increase in China, the top producer, consumer and importer of the yellow metal. Over the next four years gold demand in China should climb by around 20% as consumers get richer, says the WGC.
All this helps explain why gold has risen by 8% to around $1,300 an ounce so far this year, and paints a bullish long-term picture for the commodity.
But the last two years or so have shown that solid and expanding emerging-market demand for physical gold cannot yet compensate for negative sentiment among investors in global markets, who buy futures or exchange-traded funds (ETFs) paper gold.
Last year's exodus from ETFs has stopped, but the world economy's gradual return to normal is good news for assets such as stocks and corporate debt, and bad news for an asset that thrives on bad news.
There is so far no sign of the inflation that unprecedented money printing one day threatens to produce. Recent geopolitical upheaval appears priced in.
The upshot is that there is no catalyst for a sustained rise, but emerging markets appear to be putting a (gradually rising) floor under the price. So, gold could stay in its year-long trading range around between $1,200 and $1,400 for some time.