Gold just shattered a new record high as the US dollar drops below a level of support that’s held for over 14 years.
The precious metal touched $5,279 on Tuesday, with the US Dollar Index (DXY) trading at four year lows, dipping below a level of support that’s held since 2011.
The dollar drop is in line with a new warning from Goldman Sachs.
In its 2026 Global FX Outlook report, the banking giant forecasts further dollar depreciation this year.
The bank sees the dollar as 15% overvalued, naming the rise of AI as a potential productivity wild card.
Although Goldman believes the dollar will continue to depreciate, the bank does not believe its status as the world’s reserve currency is at risk.
“While we see a number of familiar 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 on a day-to-day, or even year-to-year, basis.”
As for the rising price of gold, Goldman’s head of Delta One, Rich Privorotsky, says fundamental flows are backing the historic rally.
“There is clearly hot money involved, but first and foremost gold is a central bank trade… a slow erosion of the dollar’s exorbitant privilege rather than a sudden loss of confidence.”
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