Gold defied traditional economic principles during the third quarter, rising in price despite a steep drop in demand. Global demand for gold tumbled to an eight-year low during the quarter, according to the World Gold Council, down 9 percent compared to the same period last year. Even so, the spot price of gold traded on the COMEX division of the Chicago Mercantile Exchange rose 3.4% during the quarter to $1284.80 the ounce.

A slowdown in the jewelry business was a major factor for the demand drop, particularly in India, where tax rule changes and a tightening of regulations governing jewelry transactions cooled the market. Interest in gold-related Exchange Traded Funds also dampened significantly, though net inflows were still positive. Total gold demand for the quarter was a relatively modest 915 metric tons.

The same divergence — higher prices in the face of declining demand – has been occurring since the beginning of the year. Through the third quarter, gold demand was down 12 percent in 2017, while the price of gold was up nearly 12 percent. Safe haven buying in response to saber rattling between the U.S. and North Korea, a weaker dollar, and concern about an overheated stock market among investors all contributed to gold’s rise during the quarter.