The value of the dollar relative to the value of gold. As the dollar loses value, gold gains value. Why is this the case?
In: Economics
There are 2 things at play here:
The value you’re seeing is gold as valued in US dollars. So even if the ‘value’ of gold was staying the same, if the US dollar is falling, then the price of gold goes up, since dollars are now worth less.
But also, people buy gold as a hedge against the falling dollar. So the value of gold tends to go up as the dollar loses purchasing power since more people are buying.
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