The strength (or weakness) in the U. S. dollar is one of the most important drivers of price of gold. However, this is not always true and there are times when they rise or fall simultaneously. The positive correlation between U. S. dollar and gold occurred, for instance, from May through December 1993, from May until November 2005, and at the turn of the 2008 and 2009.
Trends of the U. S. dollar and gold do not always align inversely, and even when they do, the percentage moves are not very well matched. Just think of the important rally in gold from 2008 to 2013, when the dollar was back where it was in late 2008. Also, peaks and troughs do not always align. Gold was rising when the dollar hit its peak in mid-2010.
This post was published at Gold-Eagle on November 19, 2014.
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