When the US Dollar gets stronger, it takes fewer dollars to buy any
commodity that is priced in $USD. When the US Dollar gets weaker it
takes more dollars to purchase the same commodity.
When the dollar gets strong, gold appears
to go down, and vice versa. That accounts for part of the fluctuations
that we see in the value of gold.
The other part is an actual
increase in the supply or demand for gold. If the price is higher when
being measured not only in US Dollars, but also in Euros, Pounds
Sterling, Japanese Yen, and every other major currency, then we know
the gold demand is higher and it has actually increased in value.
Consequently,
if gold is higher in US Dollars while at the same time cheaper in every
other currency, then we can conclude that the US Dollar has weakened,
and that gold has actually lost value in all other currencies. But the
price, because it is being quoted in $USD will be higher and give the
illusion of gold becoming more valuable. In such a case the devaluation
of gold, due to increased supply on the market, is camouflaged by a
weakened US Dollar.
