How long will gold prices rally, and when will the shiny yellow metal become cheaper? You may have asked these questions over the last few days as gold continues to scale new highs.It’s not just you; even veteran investor Chris Wood of Jefferies is baffled by the surge in gold prices.Typically, the price of gold rises when inflation spikes. While inflation has been increasing globally, the pace of the overall price rise has cooled down, but at the same time, there’s no slowdown in the price of gold, surprising Wood.   The surprise rise in American inflation in March also took the US dollar to a 34-year high. Since the global prices of commodities like gold and oil are denominated in dollars, the rising value of dollars should typically cap the rise in commodity prices. However, the recent trend has been in the opposite direction. While the rally in oil prices can be explained by the supply curbs initiated by OPEC (the lobby of the world’s biggest oil exporters), the rationale for the rally in gold prices isn’t obvious. “Greed and Fear have no idea who or what was behind such a trade, save to note that a soaring gold price is not in the interest of the relevant authorities any more than a surging oil price is. Gold is up by 29% since early October and by 18% since mid-February, while the Brent crude oil price is up by 25% since mid-December,” the global head of equity strategy at Jefferies wrote in his latest note.When do gold prices rise?As explained by JPMorgan in a note in January, gold prices usually rise in times of economic and geopolitical uncertainty as the metal is widely seen as a safe-haven asset due to its ability to remain a reliable store of value.It has low correlation with other asset classes, so can act as insurance during falling markets and times of geopolitical stress.A weaker US dollar and lower US interest rates also increase the appeal of non-yielding bullion, the brokerage noted. Markets were expecting the US Federal Reserve to start cutting rates in June before the latest inflation data.Now, the hope of a rate cut in the US have been delayed to September.Also Read: How long will gold price rally continue?When gold touched an all-time high in December 2023, the brokerage had said, anticipation played a key role in sparking the rally in the price as it is influenced by market expectations of future Fed policy.In the note dated January 17, JPMorgan had projected that gold prices would dip in the near term before climbing to new highs later in the year, with a forecasted peak of $2,300 per ounce in 2025.However, this peak has already been crossed in April, only the fourth month of 2024.These are some of the reasons why Chris Wood finds the rise in gold prices surprising:For now at least there continues to be a notable lack of inflows into gold ETFs in the Western world. Rather the reverse is the case.Gold ETFs’ holdings have declined by 120 tonnes year to date to 2,542 tonnes as of Wednesday following a decline of 254 tonnes in 2023, according to Bloomberg.The physical premium on gold bars and coins traded in Singapore are at only a normal 1-2% compared with the 7-8% levels seen at the peak of the last bull market in 2011 and 2012.There is also no evidence of a sudden pickup in sales of American Eagle Bullion coins, one of the most popular series in the US. In fact, American Eagle gold bullion coin sales declined from 19,500oz in February to 12,000 oz in March, the lowest level for the month of March since 2019.While gold mining stocks have rallied this year, they are not really outperforming bullion on the scale which would normally be expected to happen in a roaring bull market, which is what happened in the 2001 to 2011 period.Gold mining stocks remain extremely cheap based on the current bullion price. The NYSE Arca Gold BUGS Index is trading at the same level as it was in December 2005 when the gold price was only around US$500/oz. Where is the gold demand?Wood added that if all of the above factors show a distinct lack of investor euphoria as regards gold, the question remains what is driving the current rally.“The most plausible explanation remains demand from China. Still there is a lack of concrete data to confirm such an explanation,” he noted.Also Read: Which stocks to buy when gold and silver prices rise?At 5:30 am on April 12, spot gold was up 0.6% at $2,386.38 per ounce.Bullion hit a record high of 2,389.29 earlier in the session and US gold futures gained 1.3% to $2,403.90 per ounce. Back home, 10 gm of 24 carat gold was priced at 72,230 at 8:20 am, according to data on goodreturns.in.