Gold continued to hover around the significant $1,200-per-ounce level last week. It closed at $1,196.20 per ounce, up $4.60 for the week.

This was good news because the U.S. dollar gained even more strength following Friday’s positive employment report. Investors assumed this would give the Federal Reserve the go-ahead for another raise in interest rates. Although this made the U.S. dollar more attractive, gold did not decline, as would be expected.

For the past year, gold and the U.S. dollar have consistently moved in the opposite direction of one other. See the following chart from the World Gold Council.

gold and the U.S. dollar have consistently moved in the opposite direction

The World Gold Council’s recent analysis was that “gold was propelled down by the strength of the U.S. dollar against both developed and emerging market currencies, particularly, a weakening of the Chinese yuan first and Turkish lira later. In fact, the dollar’s strength has been one of the most important drivers of gold’s performance this year as confrontational trade rhetoric and sanctions [have] so far played in favor of the U.S.”

However, the U.S. employment report also showed a significant increase in wage inflation—which is kryptonite to the U.S. dollar. Perhaps this is the reason gold held firm last week.

Rick Andrews is president of Avant Capital Management