Gold historically has had an inverse correlation with the US dollar. Gold price weakness in 2014 was primarily driven by the relentless strength of the US dollar in the second half of the year. The US dollar Index (DXY) rose 13.2% in the second half of 2014, while gold dropped 10.7% during the same period. The remarkable change in sentiment for gold that we are seeing so far in 2015 is best illustrated by how it is trading relative to the US dollar. As of January 27, gold is up 9.1% this year, while the DXY has also risen 4.2%.

Gold and U.S. Dollar Index (DXY)
2014 vs. 2015 YTD

Source: Bloomberg, Van Eck Research

About the Author:
Imaru Casanova holds an appointment as senior gold analyst at VanEck. Mrs. Casanova is a proven expert on gold and gold mining and has been quoted, inter alia, in Barron’s, USA Today, Investor’s Business Daily and has appeared on CNBC.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.