Why Gold Prices Are Rising: Inflation and Global Trends Explained

**Tim Elliott** (0:00)
It's the Morning Drive, Jeff Rhodes, you're in Singapore, I believe. How's Singapore?

**Jeff Rhodes** (0:07)
Yeah, raining.
I don't mean I've ever been to Singapore ever. I've been coming for many, many years. I've never been, and it hasn't rained every day.

**Tim Elliott** (0:22)
Well, there's always that.

**Jeff Rhodes** (0:24)
Lightning, there's lightning, and still, you should have respect.

**Tim Elliott** (0:29)
Well, you take the weather with you, Jeff, you know that, that's the old adage applies, doesn't it? I suppose. So what is it? Singapore at the moment, you're heading to London next, is that right?

**Jeff Rhodes** (0:39)
I am, yeah, from Singapore. I'm here for a precious metals conference, and then we'll be heading to London.
I think it's on the 17th. Yeah, but good. And of course, Fridays wouldn't be Fridays, unless I was talking to you, Tim.

**Tim Elliott** (1:01)
Oh, do you know what? You say all the right things, and we've got the World Cup going on in the background. That's kicked off as well. There's so much going on at the moment. Do you know what? It's been interesting. We've been looking forward to speaking to you, because the theme of this week for precious metals seems to be falling sharply as oil and the dollar rise on the prospect of renewed hostilities. However, and that has been the case for kind of half of the week, however, this morning, it seems to be going in the other direction, Jeff.

**Jeff Rhodes** (1:36)
Yeah, look, it's not just the concept. The other key focus for markets has been the US economy.
And specifically, consumer prices on Tuesday follows on, sorry, on Wednesday, followed by producer prices on Thursday, both of which are very strong, very, very inflationary, and making it virtually impossible for the Fed not to raise rates to counter the inflation that is clearly taking hold in the US. However, we have had some good news on the geopolitical front overnight. And I've been warning, in my daily kind of commentaries, I've been warning that good news from the Gulf would actually spark a major rally in gold.
One thing gold hasn't had in recently has been any real shorts.
You know, it's been longs, people long or longer. But no real shorts. But the inflation gauges that we've seen from the US, as I say, CPI and PPI, I think generated fresh short selling. And once you get shorts, if something comes along to change the mood, change the consensus, then you get a rally. And I think that what happened Wednesday, Thursday, good volume as well, short selling. But once we got this good news, I think we saw short covering overnight, gold staging were running from just above 4,000 to 4,250. So a very small rally. And I'm looking forward to some good news over this weekend. And if we do get that good news, in terms of geopolitics, then I think we actually see a much higher gold price, actually.

**Tim Elliott** (4:02)
Well, let's hope so. I mean, it certainly seems more positive from the headlines this morning. I mean, you were hopeful last week, we'd see prices around the 4,500 mark, something around there. Do you agree, you quoted somebody in your report, I think it was on Wednesday this week, Ilya Spivak, head of Global Macro at Tasty Live.
If we can break the 4,100 level, I think the path of resistance fundamentally changes for gold, and we might be starting to look at 3,500 as the next level into the end of the year, which based on today's news, doesn't seem to be the case with me.

**Jeff Rhodes** (4:46)
No, no, I think it's very, very difficult to try to make predictions on anything, the dollar or equities and including gold, when you have conflicting factors. On the one hand, we've got conflicts. On the other hand, we've got rampant inflation.
Sorry, on the three points. And thirdly, is the impact on interest rates. Now, we know that the Federal Reserve, under its new chairmanship, is likely to be more kind of rate cut friendly than previously, but it just can't cut rates when you've got rate of inflation. The inflation could quickly change because it's driven by one factor only, and that is the oil price. Yeah, and so once oil supplies globally are reinstated, you will quickly see Brent back in the mid-70s, quickly.
And then suddenly, all the clamor, all the noise about inflation will go away, and it will be replaced by, you know, let's boost the economy with lower rates. Because we know, did you see the comment from President Trump earlier in the week that he loves inflation?