# Dollar Index Falls Below 96: Signal of Global Reserve Structure Reshaping

Recent developments in the international financial markets have been eye-catching: the US dollar index has fallen to 96.219, hitting a three-month low. Behind this change lies a deeper issue—global confidence in the dollar as a reserve currency is being reassessed. The current US government’s trade policies, including threats of high tariffs on major trading partners like Canada, have further heightened market concerns about the long-term value of the dollar.

Since the beginning of the year, the dollar has declined nearly 7% from the level of 103, reflecting not only technical currency fluctuations but also a structural shift in international reserve asset allocation. The dollar’s share in global foreign exchange reserves has fallen below 60%, while gold and other currencies have increased to 25.94%, a record high.

Gold and Silver Prices Rise: Market Shifts Toward Traditional Assets

Gold prices remain stable above $5,000, having broken through $5,200 earlier this year. This resilience is driven by central banks worldwide continuing to increase gold reserves—especially China’s central bank, which has added gold for 14 consecutive months. Such behavior is often seen as a clear signal of a “de-dollarization” trend.

Silver has experienced more dramatic movements, with weekly gains exceeding 5%, breaking above $110 per ounce. Strong retail demand in China and India, along with a shift from jewelry to investment products, support this trend. However, attention is needed as a major Chinese silver futures fund paused new buy-in applications on January 28, which may indicate overheating. Institutional opinions on silver vary—Citibank predicts it could rise to $120, while some analysts believe that if geopolitical risks do not escalate, precious metals may face a correction, though downside is limited. For gold’s full-year outlook, industry estimates suggest gains between 10% and 35%.

US Stock Indices Show Clear Divergence: AI Boom Faces Cold Reception

The US stock market has recently exhibited a clear style rotation. The Dow Jones Industrial Average fell 0.62%, the Nasdaq rose 0.57%, and the S&P 500 increased 0.27%. This divergence reflects a split in investor confidence.

Tech giants performed relatively well: Apple up 3%, Meta up 2.1%, Microsoft up 0.9%. Meanwhile, the healthcare insurance sector suffered heavy losses—UnitedHealth down nearly 17%, Humana over 16%, Coventry close to 10%—offsetting tech gains and dragging down the Dow.

Notably, this year’s US stock market saw a rare phenomenon: the Russell 2000 small-cap index outperformed the large caps for 14 consecutive trading days in January, the longest streak since 1996. This indicates capital is moving away from AI-related tech giants toward defensive sectors and small caps.

Skepticism Surrounds AI Investment Outlook

Microsoft, Google, Amazon, and Meta plan to increase capital expenditure by 34%, totaling $44 billion, but market doubts are emerging about the return on these investments. Ray Dalio, founder of Bridgewater Associates, bluntly stated that the current AI boom is in the “early stage of a bubble.” This hits a nerve with investors: after three years of rising stock prices supported by AI concepts, questions remain whether these tech companies can deliver real profits.

Crypto Assets Under Pressure: The Battle for Alternative Assets

Bitcoin and Ethereum continue to face pressure. When genuine capital preservation needs arise, funds tend to flow into the millennia-old precious metals rather than into digital assets that have only existed for a little over a decade. This year, silver has risen 50% and gold 17%, contrasting sharply with the hype around “digital gold” in crypto circles.

It’s worth noting that major trading platforms are actively launching trading pairs for US stocks and precious metals, as liquidity and market attention follow where the activity is. The crypto market remains in consolidation, waiting for the next demand wave.

Underlying Logic: Quiet Reshaping of the Reserve System

The core theme of today’s global financial markets is actually a rebuilding of confidence systems. US trade policies—including threats of tariffs on Canada (facing a 100% tariff risk) and a 25% tariff on Korean goods—are shaking expectations of the dollar’s long-term stability. Meanwhile, investigations into the Federal Reserve Chair by the Department of Justice further intensify concerns over “political interference in central bank independence.”

The upcoming Federal Reserve meeting will be a key event. The Fed faces a dilemma: continuing rate cuts could trigger inflation and dollar depreciation, while maintaining high rates might harm the economy. This “unsolvable” contradiction is the biggest source of current market uncertainty.

The reallocation of global reserve assets is quietly underway—dollar share declines, while gold and other precious metals reach new highs. Although gradual, the trend is clear: markets are redefining the dollar’s value—from a privileged currency back to a normal currency.

Risks: Increased volatility in precious metals, rising risk of silver decline; if the Fed adopts a hawkish stance, the dollar may rebound technically; crypto liquidity remains low, with concentrated risks.

This article is for market observation only and does not constitute investment advice.