After being inversely linked to the dollar for the past three years, other forces seem to be driving gold higher at the moment, writes FNB Chief Economist Cees Bruggemans.

Bruggemans wonders if the recent rally in gold is a demand shock linked to rising Asian jewellery and industrial demand.

"Or is financial risk aversion back in town, as expanding global imbalances make some people uneasy about what comes next?" asks Bruggemans.

Physical demand growth is sure to boost prices over the coming years as Asia continues its rapid growth.

Combine this with gold and other precious metals becoming more attractive as concerns arise over global financial risks and the impact on SA could well be strong, notes the economist.

However in true economist style, Bruggemans points out that only time will tell.

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