Dollar Surge Predicted by ARK Invest CEO, Gold and Bitcoin in the Crosshairs

Cathie Wood, CEO of ARK Invest, is predicting a surge in the US dollar, which could put pressure on gold and other dollar-sensitive assets. According to Wood, the dollar has gained 36% since August 2008 and now trades 44% above its long-term average, based on the Federal Reserve's broader index. This is in contrast to the US Dollar Index (DXY), which tracks the dollar against six major currencies and is the measure most traders follow.

Wood argues that the Federal Reserve's broader index is a more accurate measure of the dollar's strength, as it covers 26 countries and updates its weights annually. She compares the current setup to the early 1980s, when stronger US returns helped send the dollar sharply higher. Wood expects Fed Chair Kevin Warsh to maintain tight monetary discipline, which could encourage companies to reinvest in US factories and data centers, further strengthening the dollar.

The dollar's potential surge could have significant implications for gold and Bitcoin. Gold has lost 92% of its purchasing power against the dollar since 2002, and Wood thinks tighter policy could reverse some of that move. A key level to watch is $4,000, which Morgan Stanley's Amy Gower sees as strong support for gold. Meanwhile, Bitcoin historically struggles when the dollar strengthens, but in September it gained 6.14% while DXY also rose.