Gold and the dollar are not intrinsically linked. During the 20 years of the two world wars, the international monetary system was divided into several competing monetary groups, and the currencies of various countries depreciated and became unstable, because each group wanted to solve its own balance of payments problem at the expense of others. After the 1930s, the American economy developed rapidly, and the status of the US dollar began to be unprecedentedly stable because of its gold reserves and strong economic system. In this way, an international monetary system with the US dollar as the main body has emerged. There has been a period in which the dollar is the center and gold is the last reserve unit.
In addition, as the world's quasi-currency, gold in major global gold markets is quoted in US dollars. Therefore, if central banks reduce their gold reserves, they will increase their dollar reserves accordingly, and gold is negatively correlated with the dollar. That is, the dollar goes up, gold goes down, the dollar goes down and gold goes up.
After the 1970s, the proportion of the American economy in the world economy began to decline, and the influence of the US dollar was also declining. In recent years, due to the rise of China and India, the world economic map is changing with each passing day. The position of the United States in the world is being influenced by China, Indian, Russian and European Union. As the only reserve asset other than gold, the dollar's position is no longer stable. In order to avoid the risks brought by the depreciation of the US dollar, many countries have begun to implement the diversification system of reserve assets.
In short; The relationship between the dollar and the price of gold is viewed from three aspects:
1, the dollar is negatively correlated with gold.
2. The relevance of gold and the dollar shows signs of weakening in the coming year.
3. The position of the US dollar in the world currency is an important reason that affects the relevance of gold and the dollar.