Gold hit a three-month high on Tuesday morning (Frankfurt: TDM.F - news) , defying most expert views that 2014 would see further falls in the precious metal a day after a report revealed 500-tonnes of bullion is missing somewhere in China.
However, the recent rally still has many analysts questioning whether the recent turnaround is just a "dead cat bounce" or a sustained revision in market sentiment?
The yellow metal is up 6pc since the beginning of the year at around $1,290 (£785) but still a long way off the historic high above $1,900 that was achieved in in 2011. Gold endured its biggest price collapse in 30 years in 2013 as investors shifted assets out of exchange traded funds and into higher yielding equities.
Gold has risen recently but remain well below its all-time high. Graph: Bloomberg
But one broker believes that the outlook for gold is once again about to change positively.
"While the fundamental situation has brightened, the technical picture has also improved, which could spark follow-up buying that in the short term would probably drive the gold price even further up," wrote Commerzbank (TLO: CB-U.TI - news) analysts on Tuesday.
According to the bank, trading volume on the Shanghai Gold Exchange on Monday totalled 25,725kg, the highest it has been since early May last year, "pointing to robust demand for gold there".
China's love of the precious metal seem once again to be the main driver behind the current rebound in prices. China consumed 1,176 tonnes of gold in 2013, 41pc higher than in 2012, according to data released on Monday by the China Gold Association (CGA).
Bloomberg video on China's 41pc rise in gold usage from last year
This was made up of 717 tonnes of jewellery, 376 tonnes of gold bar investment and 49 tonnes in industrial use. The remaining 35 tonnes was in coins and other items, said the CGA.
However, the CGA report, which cites a figure similar to the net gold imports to China from Hong Kong of 1,157 tonnes, has created a mystery surrounding what has happened to the country's indigenous supply. About 500 tonnes of gold from Chinese mines and scrap is unaccounted for by the CGA.
According to brokers at Macquarie it "remains a mystery what happened to the other gold available in China". The missing gold will again raise questions over the strength of demand in the world's largest market for the metal amid concern that more gold is being traded on the black market. One conspiracy theory is that the People's Bank of China is simply stockpiling gold off balance sheet.
Somewhat less mysterious is the emerging market turbulence that has certainly helped to support gold prices, with investors seeking out the precious metal as a safe haven as has the change in leadership at the US Federal Reserve and the central bank's schedule for tapering monetary stimulus.