The US dollar hit a fresh low today, continuing this year’s relentless decline. Gold investors are celebrating as the weak dollar trend provides a strong tailwind for the precious metal.
The US dollar weakened further overnight, touching lows last seen in February 2022.
The US dollar index – a weighted measure of the dollar’s value relative to six major currencies – has lost around 11% since the start of the year as economic uncertainty in the US, in particular the ongoing trade tariff talks, continues to weigh on the greenback.
This uncertainty is unlikely to disappear in the short-to-medium term as confusion still clouds President Trump’s trade agenda and his authority to impose global tariffs.
Gold’s global pricing in US dollars means international (non-US dollar) investors get more purchasing power when the dollar weakens. This currency advantage typically increases buying interest and drives gold prices higher.
Gold is currently trading around 1% higher on the session and remains within a multi-month trading channel between $3,120/0z. and $3,500/0z. Within this range support at $3,200/oz. can also be seen and this level is likely to hold any initial attempt to break lower. The MACD indicator has now turned lower from its recent multi-year high, adding a note of caution in the days ahead, while the 50-day SMA (blue line) continues to support gold’s longer-term prospects.
