The main one is speculative buying, as professional investors note the increases and jump in to make a short-term profit.Another reason is the Central Bank Gold Agreement (CBGA). Yet before you rush out and stick your life savings into a bullion bar, remember that, as with any boom, somewhere along the line there will inevitably be a bust.For a start, the CBGA runs out next year. Jewellery, for example, is the biggest user of gold, and when people have more disposable cash, the demand for such luxury goods goes up. Some precious metals also have industrial applications: silver is used in the manufacture of cameras, while both palladium and platinum are used in catalytic converters.Even something as mundane as the weather can have an impact on demand.

As Alan Williamson, global metals analyst at HSBC, says: "The monsoon is important in India because much of the gold buying comes from the rural population and its agricultural profits. More rain means better crops and more money."India is the world's biggest market for gold jewellery but even a funny smell on the New York underground can bolster prices. Exactly such an event last week, feared for a short while to be a terrorist attack, was one of a list of reasons behind the surge in the gold price.There are, of course, less dramatic explanations for the price rises. Gold, for example, is traditionally seen as a hedge against a weak dollar and the metal's most recent surge has been largely attributed to the continuing slide in the US currency.Yet just as precious metals represent a haven during bleaker times, they also provide a buying opportunity when economies start to recover. Bonds have been seen as a safe asset in recent years, but this is no longer the case with the possibility of rising inflation in the future."It is not just geopolitical events and sliding stock markets that get investors rushing for little gold bars and their ilk, however.

For a start, just look at when they started rising: 2001, the year of the dot-com collapse and the global downward slide on stock markets. Just as precious metals had been out of fashion in the 1980s and 1990s, when there were richer pickings for investors in shares, so the collapse in the markets persuaded many investors to switch out of volatile equities and into more stable areas, including precious metals. This "safe haven" association is particularly pertinent for gold, which has always been investors' preferred destination when the political climate gets hot.Anais Faraj, global strategist at Nomura Securities, says: "Alternative assets like gold have got to be there as part of a diversified portfolio. In the last quarter, for instance, the FTSE 100 rose by 1.5 per cent and continues to make solid progress.Yet since 2001, there has been one market on a continuous upward track: precious metals.

Over the past couple of years, even the most financially illiterate members of the population will have noticed the comings and goings on the equity markets. Gold, silver and platinum have all produced big increases in price since then, with gold adding the most, up 47 per cent over the past three years. EADS believes this could swing matters in its favour and, while publicly staying quiet, is privately jumping for joy.There is talk that Boeing is lobbying for the UK Government to postpone its decision on the tanker deal, for fear that in the current climate it would be politic to give the contract to EADS. By contrast, the FTSE 100 has fallen 30 per cent in the same period.And the increases just keep coming: on Wednesday, gold closed at $398 per troy ounce, its highest level since March 1996 (US markets, where the bulk of precious metal trading takes place, were closed at the tail-end of last week for the Thanksgiving holiday).