Last week, gold prices consolidated above support at $1,700.00 per ounce. The metal closed the week at $1,728.60 per ounce. In his much-anticipated speech at Jackson Hole, Federal Reserve Chair Jerome Powell laid out the Fed’s focus going forward against inflation, declaring, “It is also true, in my view, that the current high inflation in the United States is the product of strong demand and constrained supply, and that the Fed’s tools work principally on aggregate demand.” If the Fed is working on the demand side of the problem, let’s take a look at what is contributing to the supply side. The major drivers of inflation on the supply side are rising energy costs, due to sanctions against Russian oil and natural gas, along with anti-fossil-fuels policies enacted in the U.S. and Western Europe. The G-7 countries’ latest proposal to deal with rising energy costs worldwide is to impose price caps on Russian oil and gas . Reuters reports that “Russian President Putin has said Moscow would halt shipments to countries that impose the price cap.” The result will be that these necessary commodities for winter will now be sold to the West through intermediaries, such as China and India, at marked-up prices that do not penalize Russia financially. The supply-side energy inflation could overwhelm the drop in demand because energy is a necessary, not a discretionary, expense. Gold may help protect against this coming inflation. Rick Andrews is president of Avant Capital Management.