Commodities, including gold, are denominated in dollars, meaning that as the greenback strengthens, commodities often do the opposite. The inverse relationship between gold and the dollar has recently been on display.

Over the past three months, the Invesco DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) is up 6.4% while the SPDR Gold Shares (NYSEArca: GLD), the world’s largest gold ETF, is lower by 5.7%. UUP tracks movements against a basket of currencies including euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. UUP tracks the Deutsche Bank Long USD Currency Portfolio Index – Excess Return Index.

The strengthening U.S. economy is translating to a stronger dollar, which is often a problem for gold. Gold, like other commodities, is denominated in dollars, meaning it has an inverse relationship to the U.S. currency.

“Much maligned gold is set to stage a comeback as the dollar weakens, according to Pictet Wealth Management,” reports Bloomberg. “Bullion will climb to $1,320 an ounce by the end of the year, said currency strategist Luc Luyet, which compares with about $1,256 on Wednesday. While trade tensions haven’t yet provided much support, an escalation combined with a slide in the dollar could lift prices, Geneva-based Luyet said on Monday.”

Related – Bitcoin Price Prediction: $5,350 in Bear Market

More Support for Gold

Other market observes are bullish on gold with some forecasting $1,400 per ounce for the yellow metal next year, assuming the dollar weakens as other global central banks reveal tighter monetary policies.