The US dollar index is an index that comprehensively reflects the US dollar exchange rate in the international foreign exchange market and is used to measure the degree of exchange rate changes of the US dollar against a basket of currencies. It measures the strength of the US dollar by calculating the comprehensive rate of change between the US dollar and a selected basket of currencies, thus indirectly reflecting the changes in US export competitiveness and import costs.

2. The relationship between the dollar index and gold.

The dollar index and gold usually show opposite trends. International gold transactions are denominated in dollars. Because of its low correlation with other types of assets, gold is often used as one of the hedging tools. In this case, gold will be regarded as a form of currency and replace the dollar to some extent.

Under the same conditions, when the US dollar strengthens (appreciates), it means that the demand for gold decreases, thus affecting the price of gold. When the dollar weakens (depreciates), it will increase the demand for gold and push the price of gold higher, which also means that gold becomes more expensive. Looking at it from another angle, this is why gold is regarded as a tool to fight inflation, in fact, it refers to fighting against the decline in the value and purchasing power of the dollar.

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