This article explores the reasons behind gold's recent price surge, particularly its connection to the US dollar. While historically there's an inverse relationship, experts discuss the potential for future changes and the implications for investors.
Gold is one of the oldest forms of currency, dating back thousands of years. And while it has always been a staple in investment portfolios, it's become increasingly popular in recent years — due in large part to the economic environment and gold's rapid upward price trajectory. In 2024 alone, the price of gold increased by 27%, reaching an all-time high of $2,790.07 per ounce in October. 'There are several reasons gold has been back in favor,' said Steve Braverman, founder of Dignity Gold.
'The most obvious is inflation over the last few years, as gold will always be a store of value during inflationary times. Another reason is the continuing conflicts in both the Middle East, Russia and Ukraine.'Various factors affect the price of gold investments, and central to this discussion is how gold's price is affected by its relationship to the U.S. dollar. We spoke to experts to help us understand gold's relationship to the U.S. dollar and how it could change in 2025. Gain the many benefits of gold investing by adding it to your portfolio today.What is gold's relationship to the U.S. dollar? 'Gold has no official relationship with the U.S. dollar and hasn't since Nixon,' says Braverman. 'The real question is, will the U.S. return to the gold standard or some version of it? Fiat has lost 99% of its purchasing power in the last 100 years.'Traditionally, however, gold and the U.S. dollar are considered to have an inverse relationship — meaning that the price of gold tends to be stronger when the dollar is weak and vice versa. This is partly because gold is priced in U.S. dollars on global markets, so changes to the dollar can impact gold's price. When the dollar is strong, gold becomes more expensive for buyers purchasing it in other currencies. The relationship between gold and the U.S. dollar has also been shaped by the 'gold standard,' a system that tied the value of the dollar to gold until the 1970s
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