Despite increasingly strong supply/demand fundamentals, gold prices continue to tread water – more or less within a narrow $100 range – having hit overhead resistance a few weeks ago near $1175 and now testing support near $1075 an ounce.

For the past year or two, financial-market expectations of U.S. Federal Reserve interest-rate policies – driven by the day-to-day flow of economic news and pronouncements by various Federal Reserve officials – have been the single-most important determinant of day-to-day fluctuations in the price of gold and the longer multi-year correction in the metal’s price.

The persistent widespread belief, so far wrong, that the Fed would soon start weaning the markets off near-zero interest rates, has weighed heavily on gold prices and fueled bubble-like conditions in many other asset markets – notably equities, long-term bonds, the U.S. dollar, New York City apartment prices, fine art, and collectibles of all sorts.

The recent improvement in the flow of U.S. economic indicators, and hints of things to come from Fed Chair Janet Yellen and a number of other Fed officials, has raised expectations that the central bank will boost its short-term Fed funds interest rate a quarter-percentage point at the next Federal Reserve policy-setting meeting in mid-December.

And, as financial-market expectations shifted in recent weeks, the price of gold has fallen to the lower end of its recent trading range.

Many investors and financial-market pundits believe that rising interest rates will weigh down the price of gold. But, if history is a guide, we should expect both rising gold prices and rising interest rates over the next few years, much like the 1970s which saw the price of gold rise from $35 an ounce early in the decade to over $850 an ounce by January 1980.

Here’s a more recent example: The last time the Fed raised interest rates was in 2004 to 2006. While the Fed funds rate rose over the period from 1.00 % to 5.25%, gold prices soared from under $400 an ounce to over $700 an ounce!