What effect would a sudden increase in the price of gold have on inerest rates?
I don’t think there is a direct correlation. The price of gold goes up when people distrust paper currency and there are inflationary pressures, or when a national economy collapses. In those situations, I believe people invest in gold to protect the value of their assets. Interest rates rise in an inflationary environment because people will not lend money if they cannot get a return on their investment and they demand a higher rate of interest as a premium to make a loan. From what I can understand, rising interest rates and an increase in the price of gold may result from the same economic forces and occur simultaneously; however, one is not the direct result of the other.
