Gold finally broke the 2000 level, and based on the chart below, the primary driver for this move seems to be the falling real interest rates – deep into the negative territory.

Note, the almost perfect negative correlation between Gold and Real Interest Rates holds since 2003.

However, going back to the previous peak, Gold peak in Sep 2011, while Real Interest Rates bottomed in Oct 2012 (at about the same level as now around -1%).

Two issues for gold bulls: 1) will real interest rates continue to fall, and 2) if yes, will gold continue to follow?