Measure how far your current gold allocation has moved from your intended target. This is useful after a strong gold rally, a decline in other assets, contributions, withdrawals or other portfolio changes.
Suppose gold rises faster than the rest of a portfolio. The gold holding can become a larger percentage even without any new purchase. The same effect can occur when non-gold assets fall.
A tolerance band can help turn continuous market movement into an explicit monitoring rule. Instead of reacting to every small change, you can compare the drift with a threshold you choose.
The gap between current and target gold allocation.
Usually in percentage points.
Asset prices and portfolio cash flows change relative weights.
No.