Gold futures continue to hit new historical highs, with prices reaching $2,555.2 per ounce on Monday, making a 400-ounce gold bar worth $1,022,080.

This precious metal has seen a significant price increase this year, making it the second-best performing asset globally, second only to Bitcoin.

Gold has risen 23% so far this year, surpassing the Nasdaq Composite Index, which is primarily focused on large-cap stocks and has risen 18% this year.

According to data from Bank of America's Global Research Division, gold ETFs attracted the largest inflow of funds in four weeks last week, attracting $1.1 billion. However, the fund has actually experienced an outflow of $2.5 billion so far this year, indicating that the driving force behind the rise in gold comes from sources outside of traditional fund flows.

Central banks, especially those in developing countries, have been purchasing gold at a record pace. Data from the World Gold Council shows that central banks purchased 290 tons of gold in just the first quarter, surpassing the previous record in the first quarter of 2023, and is expected to easily exceed 1,000 tons of gold purchases by central banks in 2024.

The World Gold Council writes, "The long-term trend of gold purchases not only remains unchanged but also continues to be dominated by emerging market banks."

In this regard, the Central Bank of Turkey topped the "Central Bank Gold Buying Chart" this year, purchasing 30 tons of gold in the first quarter, increasing its gold reserves to 570 tons.

The People's Bank of China purchased 27 tons of gold in the first quarter, marking its 17th consecutive quarter of gold purchases and bringing its total holdings to 2,262 tons. Other notable buyers include the Reserve Bank of India, the National Bank of Kazakhstan, the Czech National Bank, the Central Bank of Oman, and the Monetary Authority of Singapore.

The gold-buying frenzy by central banks has solidified gold's position as a reserve asset. According to data from Bank of America, gold has now surpassed the euro to become the world's second-largest reserve asset after the US dollar, accounting for 16% of global central bank foreign exchange reserves.

The exceptional performance of precious metals can be attributed to their unique status as tangible assets, with the lowest correlation to stocks. This makes gold a safe haven asset that can withstand market volatility and inflation. Tom Bruni, Market Research Director at StockTwits, stated, "We see gold being used as a hedge against uncertainty."

Bruni also emphasized that the price movement of gold has attracted many traders, stating, "With gold surpassing its 2011 high, it has garnered the attention of trend followers and technical analysts."

Bank of America also specifically highlighted that the recent rise in gold is different from previous rises this century, indicating future bullish potential.

The bank noted that this is the third significant gold rally in the past 20 years, but "households missed out on this rise." The previous two rallies, from 2004 to 2011 and from 2015 to 2020, attracted significant inflows into gold ETFs. However, in the past year, there has been an outflow of $6.4 billion from gold and gold mining ETFs, according to foreign media calculations.

If the trend of significant inflows into gold ETFs seen last week can continue, this trend may indicate a "perfect storm" brewing for individual investors, institutions, and central banks' gold purchases.