The price of gold hit another record on Monday, setting the highest price per troy ounce in history at $1941 for futures beginning Aug. 2. The previous record was last set in September of 2011, where the price surpassed $1900 for the first time. While investors of gold and other precious metals are jubilant over the price increase, the growth signals trepidation in the dominant global market currencies – most notably, the U.S. dollar.
According to the Wall Street Journal, the price correlation between the dollar and gold has been growing further apart over the last month. The correlation, which the Wall Street Journal measures as a 30-day moving correlation between percent changes in gold futures and the ICE U.S. Dollar Index, was at a 2020 low of -0.43 in July, showing how gold is outpacing the dollar in price fluctuations.
A broad combination of coronavirus anxiety toward the dollar, unpredictable economic prospects, falling rates and diplomatic pressures are causing many to flock toward the time-tested investment of gold. Historically, when faith in dominant currencies falls, relief is found through precious metals. Silver and copper are also on the rise in terms of price and number of active contracts, and many are betting on gold crossing the $2000 threshold sometime in the near future.