Total gold ETF holdings are at their highest level since May, 2013, and this could be due to a growing interest in commodities in general.

Will Rhind, CEO of GraniteShares, told Kitco News that growing interest in gold is driven by two main factors: "weaker U.S. dollar, and more volatility and increasing fears of inflation in the market."

Rhind compares gold's recent failure to rally in response to stocks dropping earlier in the week to what happened in 2008.

"When you have a big shock in the market, what actually happens initially is that gold prices don't respond in a very positive way," he said, "and the reason for that is because the immediate risk-off trade is normally into the U.S. dollar and U.S. treasuries, and that's exactly what happened in 2008; gold actually fell first when [stocks] crashed, but only then really started to pick up."

On monetary policy, Rhind doesn't see rate hike expectations weighing on gold. "I think the rate hikes are priced into the gold market. If you look at what happened to the dollar when the tightening cycle started, the dollar started to fall, and gold prices and commodities started to move up," he said.

Rhind added that investors should focus less on monetary policy when assessing gold's future and more on the dollar and equity market volatility.

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Editors' Pick: Originally published on February 8, 2018.

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

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