Last week, gold prices bounced off support at $1,700 per ounce. The metal closed the week at $1,727.40 per ounce. Historically, the U.S. dollar has been inversely correlated to both gold and the euro, meaning when the U.S. dollar is down , gold and the euro are up , and vice versa. Europe is currently facing cataclysmic economic conditions resulting from the sanctions placed on Russia by the U.S. and NATO. The euro has plunged dramatically and now is basically on par with the U.S. dollar, which has been rising this year. Gold prices have also declined. Much of the reason that the U.S. dollar has soared this year is that the Federal Reserve started hiking interest rates to fight inflation. If the Fed raises interest rates by 100 basis points at its next meeting as expected, rates will be at 2.5% for the first time since 2018. Yet back in December 2018—with GDP at 2.9%, unemployment at 3.9%, and inflation at 2.4%—the Federal Reserve announced it was going to stop raising interest rates because it feared slowing growth. The Fed then proceeded to bring rates down to 0.25% by the end of 2019, despite a GDP of 2.3%. The real reason may have been that, with the U.S. government debt at $22 trillion, even interest rates of 2.5% would have crippled the government’s budget. Now the U.S. government faces a debt of over $31 trillion. Keeping rates at 2.5% or higher will not be sustainable because the federal budget would be destroyed by interest payments on the debt. When rates go back down, so will the U.S. dollar—but gold will likely surge back alone. Rick Andrews is president of Avant Capital Management.