The Bretton Woods system established by 1944 stipulates that the US dollar is the most important international reserve currency. The dollar is directly linked to gold, the currencies of all countries are linked to the dollar, and gold can be exchanged with the United States at the official price of $35 per ounce. This is what we usually call the "gold standard", that is to say, all countries' currencies are based on gold, but later, due to the revival of Europe and Japan, all countries used dollars to buy gold in large quantities; And the Vietnam war in the 1960 s led to the deterioration of the American economic situation, the collapse of the Bretton Woods system, and finally the IMF gave up this system.

When the dollar index falls, gold is rising, and when gold falls, the dollar index is often on the way up, and gold and the dollar are negatively correlated for most of the year. Why can the dollar affect the price of gold so strongly? There are three main reasons for this:

0 1. USD is the pillar of the current international monetary system, and USD and gold are the most important reserve assets. The strength and stability of the US dollar weakened the position of gold as a reserve asset and a value-preserving function.

02. The GDP of the United States still accounts for 1/4 of the world GDP, and the total foreign trade is the highest in the world, which deeply affects the world economy, and the price of gold is generally inversely proportional to the quality of the world economy.

03, the world gold market is generally priced in dollars, so the depreciation of the dollar will inevitably lead to an increase in the price of gold. For example, at the end of the 20th century, when the price of gold reached a low point, people threw out gold in succession, which was closely related to the continuous growth of American economy 100 months and the strength of the US dollar. Gold is a special commodity, and the relationship between supply and demand is the basic factor that affects commodity prices.

Gold demand

From the demand distribution map of the world gold, we can know that the demand for gold is mainly divided into four categories: industrial consumption demand, gold jewelry manufacturing demand, international reserve demand and investment demand. 1. Industrial consumption demand As the "king of hardware", gold is one of the few metals with excellent physical, chemical and electronic properties, and its application fields are quite extensive. Its industrial consumption demand mainly includes electronics, chemical industry, communication, aerospace and medical treatment (dentistry). Take the electronics industry as an example. Since the beginning of 2 1 century, the development of electronic chips has advanced by leaps and bounds, and the demand for gold in the electronics manufacturing industry is accelerating. Of course, its demand is also closely related to the prosperity of the industry. Gold is widely used in the aerospace field because of its high temperature resistance and corrosion resistance. With the rapid development of aerospace industry and the trend of civil use, the demand for physical gold is increasing. Gold is an excellent choice for dental substitutes because of its metal stability and corrosion resistance. According to incomplete statistics, dental gold is as high as 12 tons. 2. Demand of gold jewelry manufacturing industry Gold jewelry manufacturing industry is the largest source of physical demand for gold, which has a huge impact on gold prices and is seasonal and cyclical. Usually in the first and fourth quarters, the demand for gold jewelry is large. China, Indian, Saudi Arabia, United Arab Emirates and other countries have great demand for gold ornaments, and their customs and habits are the main factors that determine the seasonal fluctuation of gold ornaments. For example, Spring Festival in China, Christmas in the West, Indian weddings and religious festivals will all have great demand for gold. Three. International Reserve Demand The central bank's reserve of gold is one of the important means to prevent financial risks. Judging from the ranking of gold reserves, the traditional foreign exchange reserves in western countries are held in the form of gold, while the proportion of gold foreign exchange in China is very low. According to the data of the World Gold Council, since the American financial crisis, the world central bank is accelerating the purchase of gold and increasing the foreign exchange ratio of gold. Among them, 20 1 1, the net gold increment of central banks around the world hit a record high. Central bank governors around the world have also said on various occasions that they will also increase their gold purchases. Therefore, the demand for international reserves has also become a demand force that cannot be ignored. Four. Investment Demand Due to the characteristics of gold reserves and asset preservation, there is still investment demand for gold. For ordinary investors, investing in gold is mainly for the purpose of maintaining the value of assets under inflation. Take China as an example: China's inflation rate remains high, and more and more people choose to take their money out of the bank for investment. Gold products such as physical gold bars and gold commemorative coins have also become one of the best choices. According to the World Gold Council's 20 1 1 gold demand trend report, the demand for gold in China is 769.8 tons, up 20% year-on-year. The largest increase came from the investment field, with an investment of 84.5 billion yuan, up 69% year-on-year. It can be seen that the growth of gold demand in China mainly benefits from investment demand. In April, China imported a large amount of gold, which did not exclude the involvement of real estate and stock market funds. As a hedge against inflation, gold itself is inseparable from inflation. The rise in oil prices means that the currency will rise with it, and so will the price of gold.