Did The Liquidity Trap Cause The Hike In Gold?

I have stumbled upon an interesting article by Paul Krugman, a Nobel laureate in economics; the article offers an explanation for the hike in gold of recent years. Krugman, who considers himself a deflationista, i.e. a person who believes the U.S. is currently in a liquidity trap, thinks the gains in gold is another confirmation for a liquidity trap: basically in a liquidity trap people and businesses "sit on their money" and even if interest rates plunge to zero (and U.S. interest rate has been at zero for the past couple of years), investors are still reluctant to invest their funds.

It's hard to prove that we are in a liquidity trap because even if rates are low and the economy is slowing down, there is still no evidence of deflation, especially after the recent CPI report showed the U.S. inflation rate stands at 2.2% in annual terms. But let's