The relationship between gold and the US dollar

Comparison chart of gold prices and the US Dollar Index (DXY) from January 1, 2025 to present.

• Gold price: Approximately $2,780.5/oz on January 2, 2025, reaching a historic high of $4,584/oz on December 26, showing a significant upward trend throughout the year
• US Dollar Index (DXY): Around 108.37 in January 2025, peaked at 107.61 in February, then continued to decline, dropping to 96.88 in June, approximately 97.77 in September, 99.8 in October, and 99.56 in November, showing a clear downward trend for the year

This chart clearly illustrates the comparative trends between gold prices (yellow line, left axis) and the US Dollar Index DXY (blue line, right axis) from January 2025 to February 2026.

🔑 Key findings:

1. Clear negative correlation

• Gold experienced a super bull market throughout the year, surging from $2,780/oz in January to a historic high of $4,584/oz on December 26, with a cumulative increase of nearly 65%
• The US Dollar Index showed a continuous downward trend, falling from 108.37 in January to 96.88 in June (the year's low), with an annual decline of about 10.1%, marking the largest annual drop in 30 years

1. Phased trend characteristics

• January-April: Gold rose rapidly, breaking through $3,600 on April 22; the US Dollar Index retreated from the 108 high
• May-August: Gold fluctuated in the $3,300-$3,500 range; the US Dollar Index moved within the 97-100 range
• September-December: Gold started a new round of sharp increases, soaring from $3,500 to $4,584; the US Dollar Index remained weak

1. Driving factors

• Expectations of Fed rate cuts (75 basis points cumulative in 2025)
• Escalating geopolitical risks
• Global "de-dollarization" trend, with capital flowing from dollar-denominated assets to gold

This chart perfectly illustrates the classic market rule that "a weak dollar means strong gold," making 2025 a highly symbolic year for gold investors and forex traders.