The US dollar index has demonstrated remarkable strength in recent trading sessions, breaching the psychologically significant 100 level for the first time in over two months and approaching territory not visited in half a year. This milestone marks a notable inflection point in currency markets, with the index's last foray above 100 occurring on July 31st under strikingly similar conditions—following six consecutive sessions of appreciation.
The current rally has built considerable momentum through five straight days of progressively higher lows, highs, and closing prices. Technical indicators suggest the greenback's advance may extend beyond late July levels, potentially establishing new six-month highs. This dollar strength has reverberated across multiple asset classes, with precious metals bearing the brunt of the currency's ascent.
Gold futures have experienced particularly acute selling pressure, declining $70 to trade at $3,944—a 1.7% loss that appears to have accelerated as dollar strength intensified. The pattern mirrors movements observed during the dollar's previous breach above 100 in late July, when gold retreated from approximately $3,500 to $3,300 over a six-day period. The correlation between dollar strength and gold weakness remains firmly intact, as investors rotate away from non-yielding assets in favor of dollar-denominated holdings.
Silver markets proved even more vulnerable to the dollar's advance, with futures plummeting $1.18, or 2.45%, to settle at $46.85. The white metal's steeper percentage decline relative to gold reflects its dual nature as both a precious and industrial metal, making it more sensitive to broader shifts in risk sentiment.
The dollar's ascendancy has cast a shadow beyond precious metals, with equity markets also registering meaningful losses. The S&P 500 declined 1.15%, while the technology-heavy Nasdaq 100 suffered a more pronounced 2.07% retreat, underscoring the breadth of pressure emanating from currency market dynamics and their implications for risk asset valuations.
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