The surge in gold prices this year does not suggest the world is moving away from the US dollar, the Federal Reserve's deputy director of international finance said on Thursday.
Spot gold was trading at $3,780.70 an ounce on Thursday, more than 40 per cent higher than since the start of the year. Investors have rushed to the precious metal as they seek a safe-haven asset amid the White House's shifting trade agenda.
"This price increase has indeed caused a spike in the amount in the amount of gold in official reserve assets," said Stephanie Curcuru, deputy director of the Fed board's international finance division.
"But in quantity terms ... the amount of gold reserves in official reserve assets has moved only modestly, so that suggests that it's private investor demand for gold driving up prices, rather than official demands for reserves," she said during the Federal Reserve Bank of New York's fourth annual conference on the international roles of the US dollar.
US President Donald Trump's tariffs have cast into question the status of the dollar as the world's reserve currency. The greenback has enjoyed this privilege for six decades.
Mr Trump announced a broad set of sanctions against dozens of countries, saving the harshest punishments for those the US is considered to have the largest trade deficit with.
He withdrew those harsher charges after a bond market rout. His administration remains in trade negotiations with some of its largest trading partners including China, Mexico and Canada.
While tariffs have historically caused the dollar to appreciate, this year's episode has caused the world's reserve currency to move the other way.
The US dollar index, which measures the greenback against a basket of foreign currencies, has fallen more than 9 per cent this year.
"This is the odd thing. The dollar depreciated on April 2," said Arvind Krishnamurthy, a professor at the Stanford Business School, referring to what Mr Trump called Liberation Day.
US dollar movements tend to have a direct impact on spending patterns in the Gulf Co-operation Council, where most currencies are pegged to the greenback. Experts have previously said the dollar's weakening this year has affected the region through a reduction in international remittances, less discretionary spending, and stronger tourism inflows.
A paper released last week by Boston University economics professor Tarek Hassan, San Francisco Fed vice president Thomas Mertens, and Jingye Wang of the Renmin University of China, concluded that while tariffs could weaken this status, it is not currently enough to reverse it.
The authors wrote that the weakening of the dollar's safe-haven status could lead to an increase in US interest rates and a decrease in capital outflows. The paper said a tipping point of a 26 per cent US tariff rate could lead to a shift to another anchor currency. Mr Trump is imposing an average tariff rate of about 17 to 18 per cent.
The specs
Engine: 6.2-litre supercharged V8
Power: 712hp at 6,100rpm
Torque: 881Nm at 4,800rpm
Transmission: 8-speed auto
Fuel consumption: 19.6 l/100km
Price: Dh380,000
On sale: now
The bio
His favourite book - 1984 by George Orwell
His favourite quote - 'If you think education is expensive, try ignorance' by Derek Bok, Former President of Harvard
Favourite place to travel to - Peloponnese, Southern Greece
Favourite movie - The Last Emperor
Favourite personality from history - Alexander the Great
Role Model - My father, Yiannis Davos
THE BIO
Favourite car: Koenigsegg Agera RS or Renault Trezor concept car.
Favourite book: I Am Pilgrim by Terry Hayes or Red Notice by Bill Browder.
Biggest inspiration: My husband Nik. He really got me through a lot with his positivity.
Favourite holiday destination: Being at home in Australia, as I travel all over the world for work. It’s great to just hang out with my husband and family.
Tributes from the UAE's personal finance community
• Sebastien Aguilar, who heads SimplyFI.org, a non-profit community where people learn to invest Bogleheads’ style
“It is thanks to Jack Bogle’s work that this community exists and thanks to his work that many investors now get the full benefits of long term, buy and hold stock market investing.
Compared to the industry, investing using the common sense approach of a Boglehead saves a lot in costs and guarantees higher returns than the average actively managed fund over the long term.
From a personal perspective, learning how to invest using Bogle’s approach was a turning point in my life. I quickly realised there was no point chasing returns and paying expensive advisers or platforms. Once money is taken care off, you can work on what truly matters, such as family, relationships or other projects. I owe Jack Bogle for that.”
• Sam Instone, director of financial advisory firm AES International
"Thought to have saved investors over a trillion dollars, Jack Bogle’s ideas truly changed the way the world invests. Shaped by his own personal experiences, his philosophy and basic rules for investors challenged the status quo of a self-interested global industry and eventually prevailed. Loathed by many big companies and commission-driven salespeople, he has transformed the way well-informed investors and professional advisers make decisions."
• Demos Kyprianou, a board member of SimplyFI.org
"Jack Bogle for me was a rebel, a revolutionary who changed the industry and gave the little guy like me, a chance. He was also a mentor who inspired me to take the leap and take control of my own finances."
• Steve Cronin, founder of DeadSimpleSaving.com
"Obsessed with reducing fees, Jack Bogle structured Vanguard to be owned by its clients – that way the priority would be fee minimisation for clients rather than profit maximisation for the company.
His real gift to us has been the ability to invest in the stock market (buy and hold for the long term) rather than be forced to speculate (try to make profits in the shorter term) or even worse have others speculate on our behalf.
Bogle has given countless investors the ability to get on with their life while growing their wealth in the background as fast as possible. The Financial Independence movement would barely exist without this."
• Zach Holz, who blogs about financial independence at The Happiest Teacher
"Jack Bogle was one of the greatest forces for wealth democratisation the world has ever seen. He allowed people a way to be free from the parasitical "financial advisers" whose only real concern are the fat fees they get from selling you over-complicated "products" that have caused millions of people all around the world real harm.”
• Tuan Phan, a board member of SimplyFI.org
"In an industry that’s synonymous with greed, Jack Bogle was a lone wolf, swimming against the tide. When others were incentivised to enrich themselves, he stood by the ‘fiduciary’ standard – something that is badly needed in the financial industry of the UAE."
The biog
Born: Kuwait in 1986
Family: She is the youngest of seven siblings
Time in the UAE: 10 years
Hobbies: audiobooks and fitness: she works out every day, enjoying kickboxing and basketball
Global state-owned investor ranking by size
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1.
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United States
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2.
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China
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3.
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UAE
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4.
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Japan
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5
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Norway
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6.
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Canada
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7.
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Singapore
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8.
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Australia
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9.
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Saudi Arabia
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10.
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South Korea
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Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Kat Wightman's tips on how to create zones in large spaces
- Area carpets or rugs are the easiest way to segregate spaces while also unifying them.
- Lighting can help define areas. Try pendant lighting over dining tables, and side and floor lamps in living areas.
- Keep the colour palette the same in a room, but combine different tones and textures in different zone. A common accent colour dotted throughout the space brings it together.
- Don’t be afraid to use furniture to break up the space. For example, if you have a sofa placed in the middle of the room, a console unit behind it will give good punctuation.
- Use a considered collection of prints and artworks that work together to form a cohesive journey.
The biog
Name: Marie Byrne
Nationality: Irish
Favourite film: The Shawshank Redemption
Book: Seagull by Jonathan Livingston
Life lesson: A person is not old until regret takes the place of their dreams
