In February 2025, the price of gold surged to over $2,900 per ounce. Analysts believe that the upward trend of gold prices may continue this year, with Goldman Sachs predicting that the price of gold could surpass $3,100 this year.
There are many factors driving this uptrend, including concerns about inflation, global central banks buying gold, and global political instability raising risks. Among these factors influencing gold prices, the relationship between gold and the US dollar is particularly interesting.
When the US dollar strengthens, gold prices usually fall. Henry Yoshida, co-founder of Texas financial services company Rocket Dollar, pointed out that generally, the prices of gold and the US dollar move in opposite directions. He said, “A strong US dollar will suppress gold prices, while a weak US dollar may boost gold demand, leading to an increase in gold prices.”
However, this relationship is not absolute, and in recent months, this pattern has changed.
Michael Petch, co-founder and CEO of gold investment platform Argo Digital Gold, noted that during financial instability, investor demand for hedging increases, and both gold and the US dollar may rise simultaneously.
Petch also stated that expansionary fiscal policies increasing government spending stimulate the overall economy, which in turn increases demand for gold, even in a strong US dollar environment, ultimately pushing up gold prices.
CBS NEWS reported that Kevin Bryan, Customer Experience Director at gold dealer The Alloy Market, also highlighted several factors that influence each other between gold and the US dollar include:
Supply constraints:
Mining strikes and environmental regulations may limit gold production. Therefore, even if the US dollar strengthens, gold prices may still rise.
Geopolitical risks:
Global political tensions and escalating trade disputes increase investment risks, prompting people to invest in safe-haven assets like gold, sometimes alongside a strong US dollar.
Inflation concerns:
Regardless of whether the US dollar is currently strengthening, investors may turn to embrace precious metals like gold and silver to hedge against inflation.
Digital gold investment tools:
Investment products like gold ETFs make gold more accessible but also make the market sentiment more sensitive. This creates new patterns in the relationship between gold and the US dollar.
Diplomatic policy changes:
More and more countries are reducing their holdings of US dollars and turning to hold gold, thus creating stable demand.
Ben Nadelstein, Content Director at precious metals investment company Monetary Metals, emphasized, “Gold is valued in investment portfolios because of its lower correlation with other asset classes.” With the market facing increasing uncertainty, investors favor the independence of gold, and even in a strong US dollar environment, the price of gold remains high.
(Note: This article is for general informational purposes only and does not serve any recommendation purposes. The Epoch Times does not provide investment, tax, legal, financial planning, real estate planning, or other personal financial advice. For specific investment matters, consult your financial advisor. The Epoch Times does not assume any investment responsibility.)