These rates are set based upon various elements, for ex, looking at the rates themselves as to find a story behind them, already misses the most important element: the LIBOR rate. It's not the GOFO rate that makes the story on its own, but the combination GOFO / LIBOR. Because LIBOR acts as a reference to which possible profits are measured against. So if they change the LIBOR, then ALL the GOFO rates get cranked up or down together, alike sailboats on the same wave. Comparing GOFO rates in an absolute instead of this relative fashion, already misses this key element. So if you see a long term drop of GOFO rates on your chart, then it's just because LIBOR rate dropped. http://www.fedprimerate.com/libor/libor_rates_history.htm January of 2013 0.2051 0.3028 0.489 0.8155 February of 2013 0.2013 0.2905 0.4634 0.7619 March of 2013 0.2035 0.2819 0.4477 0.735 April of 2013 0.1997 0.2774 0.4364 0.7175 May of 2013 0.1966 0.2741 0.4214 0.6936 June of 2013 0.1932 0.2737 0.414 0.6839 July of 2013 0.1911 0.2676 0.4031 0.6838 And this drop already started here: December of 2007 5.0172 4.9794 4.825 4.4227 So actually, there is nothing special specific to the gold market to it. Because the relative to LIBOR values matter, not their absolute values to zero. At the moment (or until a few days ago, considering the price upspike haha), on a net basis (that is what matters for a market as a whole) there is only a small demand to lease gold, as reflected by the decade low futures market total net position. The money for nothing club needs others to follow their upspikes, and if they don't, they quickly get out again, as to avoid others selling after they bought and before they got again out. So in order to increase the demand for leasing gold, it first needs some news around, that concerns people holding whatever, and makes them think that swapping to gold should be considered. Then the 'appetite' to lease gold will again increase. The LBMA bullion dealers see some bigger number monsterboxes / bars / ounces gold sold, they decide for a higher gold price fixing, then they take some extra futures positions of 100 ounces, and the price of gold thus rises by the combination of sold monsterboxes/bars + a number 100 ounce futures positions. The next day, they check again the bullion dealers sales figures, and if they see that the sales dropped due to the higher price, they fix the gold price lower, and quickly dump the futures positions they took the day before. If they see that the sales remained, they hold the futures positions, and if they see even more sales, they take more futures positions. All this as hedging against temporary buyers, those that buy to sell some months later. See, bullion banks / dealers don't like to sell something for $1000 to buy it back for $1300. Saying 'no' to the customers is not really an option so they hedge themselves along futures positions. They do ofcourse the same for the temporary buyers that try this along futures contracts themselves. The 'appetite to lease gold' is thus related to the amount ounces by the temporary buyers. But the GOFO rates are in conjunction with LIBOR, alike all interest rates, it's not there absolute value that matters, but their values relative to eachother, that is what determines profit versus loss. Just a higher or lower number means nothing without a reference to judge.