InvestorQ : What is the relationship between the price of gold and the dollar strength or weakness?
Dia Deshpande made post

What is the relationship between the price of gold and the dollar strength or weakness?

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Ria Jain answered.
1 year ago
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The price of gold is also largely dependent on the value of the dollar. Historically, there has been a negative correlation between the performance of the dollar and the price of gold. Strengthening dollar has been synonymous with weak gold prices and a weak dollar has been synonymous with strong gold prices. That explains why the price of gold has been under pressure ever since the US$ decisively moved above the 100 mark. This influence gets more pronounced because all commodities are denominated in dollars and hence this relationship has come to stay. There is another angle to this. When an economy becomes weak, the currency weakens. In the case of the US it is different because the dollar is the preferred currency for global trade. Hence the dollar is always in demand. One of the ways in which the dollar depreciation shows up is through the rising price of gold.

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