Great chart by @WarrenPies
that confirms what we wrote in "The New Gold Playbook" last year: Gld rising more than 25% while the USD Index (DXY) is up more than 5%—is historically unprecedented. Typically, a stronger dollar exerts downward pressure on gold prices, as gold is priced in USD and becomes more expensive for non-USD investors. However, 2024 defied this pattern. Here’s why: https://x.com/RonStoeferle/status/1889609411448222048
1. De-Dollarization & Central Bank Demand
Despite a stronger dollar, central banks—especially in BRICS nations—continued aggressively buying gold, viewing it as a hedge against fiat instability and geopolitical risks. This structural shift in gold demand is weakening the traditional gold-dollar inverse relationship.
2. Financial Repression & Real Rates
Even with higher nominal rates, real interest rates remain uncertain due to persistent inflation risks and debt monetization. Gold thrives in environments where financial repression erodes real purchasing power, regardless of the USD’s performance.
3. Safe-Haven Demand & Geopolitical Risks
From U.S.-China tensions to Middle East conflicts, gold’s role as a geopolitical hedge strengthened. Investors turned to gold as a safe-haven asset, ignoring short-term USD strength.
4. Structural Dollar Strength vs. Cyclical Gold Rally
The DXY's rise was largely driven by weakness in the yen and euro rather than U.S. economic fundamentals alone. Gold, on the other hand, benefited from a broader global shift toward tangible assets, independent of USD trends.
What This Means for 2025 If this trend persists, it signals a decoupling of gold from traditional macro relationships, reinforcing its monetary premium in a new financial era.
