Inflation can affect the price of gold in a few ways. When inflation is high, the value of money decreases, which can lead to an increase in the price of gold. This is because gold is often considered a safe-haven investment and a hedge against inflation. When the value of money decreases, investors may turn to gold as a store of value that is not subject to the same inflationary pressures.
Also, when interest rates are low, the opportunity cost of holding gold decreases and this also can drive up the price of gold. Low-interest rates make other investments less attractive and gold tends to be a good alternative.
On the other hand, when inflation is low and interest rates are high, the opportunity cost of holding gold increases and this can decrease the price of gold.
It is important to note that gold prices are affected by multiple factors and that the relationship between gold prices and inflation can be complex. Other factors such as currency exchange rates, investor sentiment, and supply and demand also play a role in determining the price of gold.