It is precisely because the global gold spot and gold futures are priced in US dollars, so the weakening of the US dollar will make gold cheaper in front of non-US investors. In other words, the bad news of the dollar is the threat of inflation, and investors are unwilling to take risks in investing in the United States. These bad news are all good news for gold.
The total economic output of the United States has always been the highest in the world, and it is called the locomotive of the world economy. At the same time, the international gold price is denominated in dollars, which makes the development of American economy and the trend of the dollar have a great influence on the gold price.
When the American economy develops well, the financial market is stable and the inflation rate is low, it will enhance people's confidence in the US dollar, thus attracting a large number of international funds to invest in the US market, promoting the appreciation of the US dollar, and then affecting the price of gold; At the same time, the Fed will make different monetary policy arrangements according to the economic situation in the United States. For example, the Fed's decision to raise interest rates will promote the appreciation of the dollar in the foreign exchange market. Investors feel that holding dollars can earn high interest income, while holding gold is too expensive. In this case, investors' investment orientation will change, which will affect the demand and price of the international gold market.
The appreciation of the dollar shows that people's confidence in the dollar has increased, and then their holdings of the dollar have increased, while their holdings of gold have decreased, 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 gold.