The US dollar index falls 10% in 2025 while gold reaches $4,400 and silver soars 140%

Source: Yellow Original Title: The US Dollar Index Falls 10% in 2025 as Gold Hits $4,400 and Silver Surges 140%

Original Link: The US Dollar Index has fallen approximately 10% in 2025 while precious metals hit record highs.

Economist Tyler Cowen warns that the flight to gold and silver indicates waning confidence in the dollar’s role as the world’s primary safe-haven asset.

Gold is trading around $4,400 per ounce, up more than 66% so far this year.

Silver has surpassed $72 per ounce, with an increase of approximately 140% this year.

What happened

The US Dollar Index (DXY) has fallen 9.4% against a basket of major currencies, including the euro, yen, and pound, through the end of December.

This decline marks the largest annual drop for the dollar since 2017.

Gold prices reached a record high above $4,540 per ounce on December 26 before retreating to around $4,330.

Silver exceeded $77 per ounce during the same period, extending its historic rally.

In an opinion piece, Tyler Cowen, an economics professor at George Mason University, described the surge in precious metals as a “warning sign for the economy.”

“The rush to precious metals should concern us all,” Cowen wrote.

“It reflects a new and possibly disastrous danger on the horizon.”

Cowen argues that increased economic correlation means fewer options for financial protection during crises.

“Before, if you were worried about the future, you moved into the dollar as a safe haven,” Cowen explained.

“But if the government itself and US policies are unpredictable, and its economy volatile, you will seek other hedges instead.”

Why it matters

The dollar’s decline is due to multiple factors, including slower US growth, persistent fiscal deficits, and political uncertainty.

Federal Reserve officials remain divided on future rate cuts, despite markets pricing in two additional reductions in 2026.

Central banks worldwide have accelerated diversification away from dollar reserves.

The US Dollar Index touched its lowest level since early October, at 97.7.

Gold has gained over 70% in 2025, marking its best annual performance since 1979.

This shift reflects changing perceptions about US policy predictability and the dollar’s traditionally countercyclical role.

Geopolitical tensions, including conflicts in Ukraine and the Middle East, have amplified demand for physical assets as safe havens.