Gold just broke a new record as the US dollar falls below the support level it has held for more than fourteen years.
The precious metal reached $5,279 on Tuesday, while the US Dollar Index (DXY) traded at a four-year low and fell below a level of support that has existed since 2011.
The dollar’s decline corresponds with a new warning from Goldman Sachs.
In its Global FX Outlook report for 2026, the banking giant predicts further depreciation of the dollar this year.
The couch sees the dollar is overvalued by 15%, prompting the rise of AI to be a potential productivity wildcard.
Although Goldman believes the dollar will continue to depreciate, the bank does not believe its status as the world’s reserve currency is in jeopardy.
“While we see some known downside risks to the dollar, we think it is still important to distinguish between dollar depreciation and dollar dominance. Our forecast for further, modest dollar depreciation is consistent with more balanced global growth and an overvalued, overperforming, safe-haven currency.
We have seen only limited evidence of de-dollarization or displacement of the dollar’s dominant international role in recent years and do not expect this to contribute to the dollar’s performance day-to-day, or even year-to-year.”
As for the rising gold price, Goldman’s head of Delta One, Rich Privorotsky, said say fundamental flows support the historic rally.
“There is clearly hot money involved, but gold is primarily a central bank trading activity… a slow erosion of the dollar’s exorbitant privilege rather than a sudden loss of confidence.”
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Generated image: Midjourney