As with most relationships, the one between gold and the U.S. dollar is nuanced. But if Donald Trump’s push for a weaker dollar materializes, it could serve as a strong tailwind for the precious metal.
“There’s growing preference within the Trump administration for a weaker dollar to enhance U.S. manufacturing competitiveness,” said Tom Bruce, a macro investment strategist at Tanglewood Total Wealth Management. “If that policy direction persists, it could significantly support gold.”
While Treasury Secretary Scott Bessent has tried to reassure markets that the U.S. is not actively pursuing a weaker dollar, Trump’s broader policy stance has already been disruptive to currency markets, according to Kit Juckes, FX strategist at Société Générale.
Historically, gold has maintained a largely inverse relationship with the dollar—a correlation clearly seen on Apr 22, 2025, when gold futures hit a record $3,509.90 per ounce, while the dollar index dropped to its lowest level since Mar 2022.
Evolving Dynamics
Simply put, a strong dollar makes gold more expensive for foreign buyers, thus exerting downward pressure on prices. Conversely, a weaker dollar makes gold more attractive.
More influential than exchange rates, however, are interest rates. As U.S. bond yields rise relative to other countries, the dollar benefits, while gold—being a non-yielding asset—tends to weaken.
But that traditional dynamic began to shift following Russia’s 2022 invasion of Ukraine and the West’s freezing of Russian FX reserves. This geopolitical pivot prompted countries like Russia, China, and Iran to reduce dollar reliance and increase gold reserves.
"Gold is no longer just a monetary hedge—it’s being used as a geopolitical hedge, complicating its traditional relationship with the dollar," said Tom Bruce of Tanglewood Total Wealth Management.
In recent years, gold accumulation by foreign central banks has driven a sharp price surge, partly motivated by a desire to repatriate assets and distance themselves from potential U.S. sanctions.
George Milling-Stanley, chief gold strategist at State Street Global Advisors, noted that the weakening of the gold-dollar relationship can be traced back to the 2008 global financial crisis. Since then, the correlation has become asymmetric: gold doesn’t always fall when the dollar rises, but it often rallies when the dollar weakens.
Bruce added that the recent “sell America” trade has disrupted the traditional inverse link between gold and the dollar. “If the dollar starts losing its safe-haven status, the historical inverse correlation with gold could weaken further—or evolve entirely,” he said.
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