Dollar and gold, the impact of the dollar on the gold market mainly has two aspects. First, the dollar is the price mark currency in the international gold market, so it is negatively related to the price of gold. Assuming that the price of gold itself has not changed, the dollar will fall and the price of gold will rise.

On the other hand, gold is an alternative investment tool for dollar assets. In fact, in the years before 2005, one of the main factors for the rise of gold price was the sharp decline of the US dollar for three consecutive years.

Extended data

Through the analysis, judgment and grasp of the global macro situation, the price of gold is denominated in US dollars, which is directly affected by the US dollar. Therefore, there is a great negative correlation between gold and the dollar.

First of all, the appreciation or depreciation of the dollar will directly affect the change of international gold supply and demand, which will lead to the change of gold price. From the demand of gold, because gold is denominated in dollars, when the dollar depreciates and gold is bought in other currencies, the same amount of money can buy more gold, thus stimulating demand, leading to an increase in demand for gold, and then pushing the price of gold higher.

On the contrary, if the dollar appreciates, the price of gold will become more expensive for investors who use other currencies, which will curb consumption and lead to a decline in the price of gold.

Secondly, the appreciation or depreciation of the dollar represents people's confidence in the dollar. The appreciation of the dollar shows that people's confidence in the dollar has increased, thus increasing their holdings of the dollar and relatively reducing their holdings of gold, thus leading to a decline in the price of gold; On the contrary, the depreciation of the dollar led to an increase in the price of the dollar.

It is worth noting that the negative correlation between the dollar and gold is not excluded from the long-term trend and the short-term situation. For example, some time ago, the dollar and gold rose simultaneously. The reason for this is that both are safe-haven products, and the increase in market demand for safe haven may push the dollar and gold to rise simultaneously.

Baidu Encyclopedia-Gold and Dollar