Why is it that so many investors have this belief that gold can only go up if the Fed drops interest rates.

When interest rates were hiked 18 consequtive times until last year, gold continued to climb. I recall each hike would kick gold back for a day or two and then it would recover.

During this time the US dollar continued to decline and there is without a doubt a corelation of the USD to gold. However, the important question is why would the USD  decline while interest rates were going up?

A currency's worth can be boiled down to a couple of factors. One is supply and demand and the other is the equity the country has behind it.

During the 2000's the US has increased which means more debt and less equity behind the USD. As interest rates increased, this only exacerbated the problem as it cost more to service this debt, particularly since the deficit was increasing. Debt up, equity down. Dollar worth less.

Then there was the issue of the trade deficit and this relates to supply and demand. As long as you're shelling out more to other currencies than they are buying in yours, it creates a demand for everyone else's currency and a lack of demand for yours. A basic supply and demand situation.

Now the situation is that interest is decreasing. Unfortunately the debt is not because so is income and while the costs of servicing the debt are reduced, there's less money to pay it. In fact, they must borrow more. To make matters worse, if a country has lower interest rates than another then there is no reason to put your money in their investments. After all, why invest in a US bank earning 1% if you can invest in a european bank earning 3%. To invest means you buy that currency. Again a supply and demand equation. Lower interest rates means lower demand. 

Then there is the increased supply but we all know about that. 

So what's ahead? Will the lower dollar mean a lower trade deficity and an increase in demand for USD's? Will rates start to go up and increase demand?

Not likely on either front because while the dollar is lower, inflation is higher. If the US economy were a labor intensive economy then perhaps we'd see some benefit but it's not. Most of the labor that goes into a car comes from a robot, which is made somewhere else and runs on energy which costs more.

Secondly, rising interest rates will still not keep up with the rest of the world so there will be little incentive there.

Over-all the picture looks very, very grim for the USD and very very good for Gold.