What determines the gold price in currencies around the world?
Allow me to explain using some examples. When gold is bought by Europeans who sell Euros, the dollar index does not have to rally, while gold goes up in price as it becomes more scarce. The Euros used to buy the gold are either kept in Euros by the gold seller or exchanged for other currencies, but the Euros used to buy the gold do not go away effectively unless they are considered of value and are held by the gold seller. But why would someone love holding Euros at a time when most wanted to flee the currency? They dont. So the gold seller immediately exchanges Euros into either U.S. dollars or some other currency. Only when net U.S. dollars are being purchased vs. other currencies in the dollar index, does the dollar goes up due to a gold purchase by a European. This means that the US dollar index does not appreciate vs. the Euro due to European gold purchases unless dollars are purchased with the proceeds by the gold seller, but gold goes up in dollar terms because there is less of
