"...The price of gold
After several years of trading within a fairly narrow price range, gold rallied to over $400 per ounce in early 1996 (Graph VI.12). Gold producers' opportunistic hedging through forward and short sales in part accounts for the stability of prices in 1994 and 1995: every time the price started to rise, producers would take action to lock in their revenues. The increased scale of such hedging may help account for the extraordinary rise in gold lease rates in the approach to the turn of the year 1995/96. That is, when gold lenders followed their usual practice of reducing their credit exposures at end-year, those who needed to borrow gold to sell it short had to offer unusual compensation.
After the turn of the year, when speculative buying pushed the price above this well-established range, some gold producers scaled back their hedging, putting their shareholders in a position to benefit sooner than previously from any sustained rise in the price of gold. As observed above with regard to currencies, the movement of the gold price outside its recent trading range was also associated with a rise in volatility (although in this case measured by realised price movements rather than by implied volatility). More recently, gold has traded fairly calmly at prices below $400 an ounce..."