Gold Surges Past $4,200 as US Payroll Growth Slows

**Tim Elliott** (0:00)
It's the Morning Drive, time to talk gold now. Our weekly check in with Jeff Rhodes, who is the MD for Business Development in the Middle East and Asia for Monetary Metals. Not in the Middle East or Asia at the moment though, Jeff. You are in Hartfordshire, the United Kingdom, is that right?

**Jeff Rhodes** (0:18)
Absolutely, Tim, yeah, Bronxville.

**Tim Elliott** (0:20)
Bang on, did it. How are you? Nice to see you.

**Jeff Rhodes** (0:23)
Yeah, good, mate. How are you?

**Tim Elliott** (0:25)
Still not too bad here. Watching more football than I necessarily should. I'm finding the timings very difficult, I have to say, Jeff, at the moment.

**Jeff Rhodes** (0:35)
Yeah, it's okay in the UK. Normally, you get the eight o'clock or nine o'clock match, which is good.
Did you watch Harry Kane save England? Do you have an eye on it?

**Tim Elliott** (0:49)
Do you know, he's such an interesting player to me because obviously he was the captain of your beloved club, Tottenham Hotspur, went to Germany. But he's truly world class in every way. You watch him and you just think that is, not only is he one of the great strikers alive now, I think, probably fair to say, but he's a real team leader, tracks back, he's a great player.

**Jeff Rhodes** (1:17)
Yeah, he is, Tim, and yeah, he's fantastic. So, but Mexico, very, very difficult, I would have thought.

**Tim Elliott** (1:27)
Potential banana skin, many would agree, I think.

**Jeff Rhodes** (1:31)
Yeah, it is, absolutely. But yeah, but anyway, so what are we going to do when the World Cup's over? Not much to talk about.

**Tim Elliott** (1:38)
But we'll have nothing to talk about.

**Jeff Rhodes** (1:41)
Gold is doing very well. Finally, we've got some good news. And I think the good news came with bad news, which was the US jobs state yesterday, non-farm payrolls that came in a lot lower than expected. And has not exactly taken interest rate hikes off the table, but the noise is definitely much less than before. So, and with that, we've seen gold rally back to 4,200.
We've been having the last couple of weeks, hovering around 4,000, and people were getting a bit nervous on the downside. But yeah, a good rally overnight, and I think heading for the first weekly gain in about 4 or 5 weeks.

**Tim Elliott** (2:39)
Well, I checked early this morning, and it's been around the 4,000 level all week, but interesting this morning. I mean, I wonder to what extent is gold trading as a safe haven versus a speculative asset? I mean, we've been discussing for, it feels like weeks, maybe even months. But we're certainly seeing a kind of a decoupling from, you know, traditional historical correlations, i.e.
this is not what you would expect at this time, given all the circumstances.

**Jeff Rhodes** (3:15)
That is absolutely right. And the gold is so diverse, and it can be whatever you want it to be, frankly.
But at the end of the day, it is a currency, it is the currency that apparently has no interest rate, although we believe there is an interest rate to be had with gold.
But really, it is that sort of currency aspect of gold that we've really been focused on, and interest rates. So higher interest rates, not good for gold, because gold interest rates are meant to be flat, although of course with Monetary Metals, you can get 4%. But really, the fact that gold is a currency and driven by interest rates has been really what we've been looking at since the start of the year. The rally to 5,600 in February was really driven by the fact that we were talking lower interest rates. And then of course, we had the conflict and rising oil prices, which had a massive impact on inflation. And with inflation comes higher interest rates, and with higher interest rates comes a lower gold price. And that's really been the dynamic. Nothing to do with safe haven, although at the end of the day, gold is your go-to asset. That will always ensure that it rises in value over time.

**Tim Elliott** (4:57)
Do you know, I've been watching what the Fed chair, Kevin Walsh, has been saying, and the indications from the Federal Reserve. He said on Wednesday that inflation expectations and inflation risks have come down in recent weeks. Even as he repeated, the central banks committed to bringing inflation down to 2%. You've long spoken about that. Traders are pricing in round about a two-thirds chance of a rate hike for September, depending on where you look, to be honest, at the moment.