Gold and USD

Gold vs. the Dollar

Gold is an asset has it has intrinsic value ie similar to investment in a house or other property such your kebun durian or kelapa and shares. 

As gold is mostly quoted in USD its value fluctuate over time, sometimes in a volatile fashion. As a rule, when the value of the dollar increases relative to other currencies around the world, the price of gold tends to fall in U.S. dollar terms. It is because gold becomes more expensive in other currencies. As the price of any commodity moves higher, there tend to be fewer buyers, in other words, demand recedes. Conversely, as the value of the U.S. dollar moves lower, gold tends to appreciate as it becomes cheaper in other currencies.

Simply means, demand tends to increase at lower prices and vice versa.

While the relationship between the value of the U.S. dollar and gold is important, the dollar is not the only factor that affects price of gold. Interest rates also affect the price of gold. 

Gold does not yield interest in itself; therefore, it must compete with interest-bearing assets for demand.

When interest rates move higher, the price of gold tends to fall, since it costs more to carry the metal. In other words, other assets will command more demand because of their interest rate component.

Although this was a factor few years back but currently the relationship gold eith interest rate wad not that strong.

There is also a psychological factor attached to the value of gold. The price of gold is often sensitive to the overall perceived value of fiat or paper currencies in general terms. During times of fear or geopolitical turmoil, the price of the historic metal tends to rise as faith in governments falls. During times of calm, the price of gold tends to fall.

 As perhaps the world's oldest and most storied currency, gold is an important barometer in terms of global economic and political well-being

So while rising interest rates may increase the U.S. dollar, pushing gold prices lower (gold prices are denominated in USD), factors such as equity prices and volatility coupled with general supply and demand are the real drivers of the price of gold. If you look at the chart, the blue line is DXY ie Dollar index. By September 2018 gold and DXY are positively correlated. This is basically due to demand of gold. It was reported in 4th quarter last year Central bankers of most countries have been buying the good.In fact last year, holding of gold by Central Bankers were the highest in 50 years.