Historical trading patterns work until they do not, and gold has ignored some of the leading factors that have caused past price corrections. Gold is interest-rate sensitive because the precious metal competes with other assets for capital flows. Rising interest rates tend to cause investors and traders to purchase bonds because of attractive yields.
Since the U.S. dollar is the world’s reserve currency, it is the pricing benchmark for gold and most other commodities. A strong dollar tends to weigh on gold as it causes the gold price to rise in other currencies, leading to selling pressure.
