Gold falls into a bear market while analysts fear oil prices could rise significantly

Added: 2026-05-31

[00:00:00]The gold price was up 70% in a little over a year for that was not the most recent year. It was back sort of 18 months two years ago. That's just an astonishing run for any asset to be frank, but particularly your safe haven asset.

[00:00:20]>> Gemma Dale, welcome to the business.

[00:00:22]>> Thank you for having me.

[00:00:23]>> Now, the price of gold is in a bare market. I guess first of all, what does that mean and why? So it means that the price is off 20% or more. I think it's absolutely essential to put this in context because the gold price was up 70% in a little over a year for that was not the most recent year. It was back sort of 18 months two years ago. That's just an astonishing run for any asset to be frank, but particularly your safe haven asset. I mean, gold is supposed to be uh was back in the day a core part of people portfolio that they held as as ballast to be honest. It was the thing that holds up when everything else goes to pieces. In a bare market for everything else, your gold is quite stable. We've seen the opposite, which is the price went nowhere for quite some time and then rocketed. So, we saw this incredible acceleration in the gold price and everyone was publishing pictures of people lining up in Martin Place to buy their little bars and so on. And it's come off a bit, but it's come off.

[00:01:22]>> It's come off a lot. And it took a long while to It did take some months uh as many as many months as sort of 12 months to get up to that record high.

[00:01:32]>> True.

[00:01:33]>> And it's come down in a relatively short space of time, hasn't it?

[00:01:36]>> This is really true. I think most people though who've watched the gold price for any meaningful period expected a pullback. And I don't think a 20% pullback is particularly dramatic in the context of that rise for this particular asset. There are certain things that are supposed to be very volatile. They are speculative. You do anticipate really dramatic price changes. Gold's not one of them. So when you see a run of 70%, even if it is over a reasonable period of a year or two, a year or two is not a sort of a long time for gold. It's quite short really. And so I don't think a 20% pullback's particularly surprising. It's sort of stabilized where it is. and a lot of uh individuals and sort of longerterm investors still see it having a much bigger role to play in portfolios than it has for the last couple of decades. This is a real it's a real surprise, right? So when we financialized assets and everything had to be bought on market and it was all listed and so on or we went to private credit and private equity and so on, gold lost its shine. Sorry for the pun, but it lost its shine and it really sort of fell away in terms of asset allocation, portfolio allocation for a lot of individual investors. Just last year, we had Morgan Stanley saying that they should see a portfolio allocation of 20 plus% to gold. I that's an extraordinary allocation.

[00:02:56]That's an enormous uplift from where people were before. So I think at this point in time, most people are fairly underallocated to gold. They haven't experienced a massive pullback. Even if they do have some allocation because they bought it earlier, maybe we'll see more.

[00:03:09]>> Well, can I just ask though because if the bond market sells off, >> yields rise and it can make borrowing difficult. If equities, >> you know, fall off a cliff, it can really hurt company valuations and their ability to invest and grow. What does it mean? Gold falls by a lot.

[00:03:28]The marginal buyer of gold over the last decade or so has been central banks. So the pain's probably not felt particularly broadly through the investor population. It's really held at the institutional level and central banks. So for most investors not going to make a massive difference to anything in terms of where you are allocating.

[00:03:49]We're certainly seeing a lot of investors who are very conscious of what's happening with bond yields and so on, but they're not really factoring gold into it at all. Now, generally speaking, an investor would look at gold as a hedge against inflation.

[00:04:03]>> Now, gold's in a bare market. Does that tell us that the inflation problem has gone away?

[00:04:08]>> Uh, or am I is that wishful thinking?

[00:04:10]>> It's a really good question. I think that's very unlikely at this point in time and maybe interest rates are a better proxy for where we anticipate inflation to go. I think again, you've got to look at the gold price in the context of what's happened over 12 18 months. Even over 12 months, it's up more than 30% despite the recent pullback. So, it's not that the inflation problem, let's call it, has gone away. And I think there's also this concern that CPI and current levels of inflation may be relatively moderate compared to where they will land if we don't see some resolution in the Middle East and some of the other issues that are concerning markets.

[00:04:49]>> What's the NAB's view on that at the moment? Are we likely to see some easing in supply over coming months? Because frankly, if you look at the forecasts for the price of oil >> after five weeks or six weeks or seven weeks straight up for MS is not fully reopened, then the price was headed to $200 a barrel in terms of the benchmark.

[00:05:08]Brent, well, we're long past that and nothing's happened. And in fact, it's under $100 US a barrel. Gemma, what's going on?

[00:05:16]>> I wish I knew. Uh, this is a really interesting one. It surprised so many pundits and those who are very wellinformed and those who are less well informed about how the oil price moves.

[00:05:26]I think at this point in time there's a real concern that the price has been somewhat suppressed by massive releases from the strategic reserves uh from a little bit of jaw boning let's call it coming out of the major news outlets from the Trump administration and that perhaps we haven't really seen the impact of the closure in the strait and also the impact on actual production so there is this concern that the price is perhaps not where it should And if the closure of the straight continues, and it is such a big if, we get different news headlines every day, we don't know where it's going to land, then the price will rise and that's inevitable. But we've been saying that for quite a while, and it hasn't happened yet.

[00:06:09]>> No. And and it has fed through into the data because the uh havinging of the fuel excise meant that for April, the monthly CPI uh was was better than expected. The headline figure 4.6 to 4.2%. Um but that core figure was 3.3% to 3.4%. So the core inflation rate did rise.

[00:06:30]>> The Reserve Bank won't like that. Its inflation forecasts were well above that but it still means inflation is moving in the wrong direction. So where do you think interest rates are headed based on that?

[00:06:42]>> So NAB's changed its forecast which is quite interesting. We were anticipating a rise in June of 25 basis points push it out to August. uh and the primary reason for that change was not CPI, it was actually unemployment. So we saw that uh in the trajectory we did not want to see in employment uh that not only were there fewer jobs, there was a bit of a contraction and uplift in the unemployment rate and that surprised us and we felt that would feed into a little bit of concern I think from the RBA because they've been talking about the labor market as something they haven't been super worried about. That was the one that we were watching. We think maybe we'll just push out that expectation for an increase by a little bit further.

[00:07:23]>> Well, do you think there is a risk that unemployment will rise much higher than everyone thinks it will?

[00:07:30]>> There's always >> there's always that risk to be frank.

[00:07:33]Business conditions are actually now positive. Uh >> you got youth unemployment though surging at the moment.

[00:07:38]>> We do have a real issue with youth unemployment. It's a really tricky one.

[00:07:41]I mean we've had the budget which has sort of created a fair bit of uncertainty. conditions are actually relatively strong. The economy has been far more resilient than anyone anticipated. I think that's the strongest thing we can say. Economy continues to be far more resilient than we expect. The consumer sentiment is really poor, but spending is continuing.

[00:08:01]So, all of these data points continue to point to a relatively okay scenario. It sounds like things could get dreadful, but it's just not playing out that way at this point in time. Well, when you say dreadful, uh, what is the NAB worried about? In fact, I'll rephrase that. What is Gem and Dale worried about over the next few months?

[00:08:20]>> So many risks. I mean, we love all the risks. Uh, so many things to think about. I think it depends whether you're an investor or whether you're just an ordinary participant in the economy. If you are an investor, you're worried about a lot of things. One of the things you're worried about is the just extraordinary levels that we see particularly US markets at. And that shouldn't worry you unless you are fully aware of how benchmarks are constructed and the extent to which all the performance is just coming from a tiny handful of stocks. So 85% of the performance the S&P 500's come from tech nothing else. And we also have far more stocks at 52- week lows than at any period in the recent in sort of recent memory. So we've got this real divergence of performance in US equities and US equities a much greater proportion of global equities than they have been in the past. So you've got this real issue that some stuff is doing super well. You portfolio actually looks great but it's a tiny handful of things driving the market higher and higher. So that's a concern. There are concerns about private markets particularly private credit and the extent to which a lot of things have not really been marked in market and that there may be some real simmering risks in there.

[00:09:29]But for most investors, they're actually doing pretty well. It's quite similar to the story about the economy. Things are actually going much better than your fears might tell you they are.

[00:09:37]>> Well, Gemma Dal, thank you very much for joining the business.

[00:09:40]>> Thank you for having me.