Dollar Soars to New Highs, Crushing Gold Prices

The US dollar index soared to new 2026 highs this week, reaching levels not seen since 2007. The strong dollar and rising bond yields weighed on gold prices, which failed to rally despite a softer-than-expected inflation report.

Gold had initially jumped by $251 after the inflation data was released, but gave back its gains as yields and the dollar recovered. The precious metal settled at $4,186.70, up just $7 from the previous day's close.

The gold price has been stuck in a bearish trend, with the USD index pushing higher and oil prices also increasing. Crude oil has turned up from its target area, and the ISM's prices-paid index followed suit, both of which are bullish for the dollar but bearish for gold.

The author notes that the current rebound in gold is just a verification bounce, with the next stage expected to be a move towards $3,920. The larger slide is still on track, and the USD index has broken above its May 2025 high, opening up the possibility of much higher levels.