Other things being equal (always important to say), the gold price tends to go up when real (inflation adjusted) interest rates go down and it tends to go down when real (inflation adjusted) interest rates go up. Like other commodities, gold is a non-earning asset so it does not naturally offer an ongoing real (inflation adjusted) rate of return like cash and bonds typically do in the form of interest and like equities and real estate in the form of earnings and rent. That means that when the value of the dollar goes up, gold prices tend to go down, and vice versa. This strong negative correlation is apparent when you look at their long-term price histories. The next chart shows the US Dollar and gold prices over the past 40 years. It’s common wisdom that when interest rates go up, gold prices go down. This seems to make sense, since gold does not pay any interest. Why would someone buy gold, the thinking goes, when instead they could buy a bond that pays them 3, 4, or 5% per year?