NEW YORK (TheStreet) -- Gold and gold mining stocks look to continue their fall as the U.S. dollar moves higher, believing monetary policy will tighten by next year.

SPDR Gold Shares  (GLD - Get Report) and Market Vectors Gold Miners ETF  (GDX - Get Report) both traded at yearly lows on Monday, while PowerShares DB US Dollar Index Bullish  (UUP - Get Report) maintained its uptrend, as optimism surrounding U.S. non-farm payrolls outpacing expectations in September continued to support the dollar. 

The gold miners ETF is comprised of Goldcorp  (GG) , Barrick Gold  (ABX) , Newmont Mining  (NEM - Get Report) , Franco-Nevada  (FNV - Get Report)  and Silver Wheaton  (SLW) .

The U.S. dollar and gold share an inverse relationship as gold is known to hedge against inflation. When the U.S. dollar falls on inflationary concerns, or as the Federal Reserve devalues it for the purpose of stimulating economic growth, gold prices generally increase.

As the dollar index has risen nearly 10% since May, gold and gold mining stocks have been heavily sold off. Gold has fallen nearly 11.5% since early July, while gold miners, whose profit margins are dependent on higher gold prices, have fallen close to 25% since early August.

Considering the improvement in the labor market, the Fed is expected to raise short term interest rates by the middle of next year. The federal funds rate has been between 0% and 0.25% since 2009, with many calling for it to be increased as acknowledgement of improvements in the economy. The dollar notched its 12th straight week of gains Friday on such expectations.

As the trend of a stronger dollar looks to continue, considering fundamental economic strength, as well as the relative strength of the dollar against its foreign counterparts, such as the euro, gold and gold mining stocks are expected to have trouble finding significant buying support. For this reason, gold may continue to weaken or trade in a sideways pattern for the considerable future, while a significant reversal higher is unlikely.

GLD Chart
GLD data by YCharts

At the time of publication, the author held no positions in any of the stocks mentioned..

Follow @macroinsights

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

TheStreet Ratings team rates GOLDCORP INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOLDCORP INC (GG) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself."

You can view the full analysis from the report here: GG Ratings Report