Swings in the US dollar have no long-term impact in the price of gold. Nor is gold an inflation hedge.
December 2004: US Dollar Index 108, Gold $435
April 2009: US Dollar Index 108, Gold $883
November 2014: US Dollar Index 108, Gold $1182
Gold vs Trade-Weighted Dollar Index 1973-Present
While gold generally moves opposite the dollar in day-to-day fluctuations, long term impacts are nonexistent.
Here is the chart with the index of gold and the dollar set to the same base year, 1997.
Gold vs Trade-Weighted Dollar Index
Gold vs the CPI
Gold fell from $850 to $250 from 1980 to 2000 with inflation every step of the way.
People had faith in the great "Maestro", Alan Greenspan.
But, But, But
But Mish, inflation is understated.
Indeed it is. Central banks are clueless regarding how to measure inflation. Bubbles are a direct consequence of inflation.
Note the implication: Because inflation is higher than reported, gold is even less of an inflation hedge!
There is one exception to the rule gold is not an inflation hedge.
The exception is extremely high rates of inflation, especially hyperinflation.
In case of hyperinflation, nearly any storable physical asset is a hedge: cheese, cigarettes, gasoline, etc.
There is nothing unique about gold as an inflation hedge in case of hyperinflation.
Three Things Gold Isn't
A function of the US dollar in any meaningful way
A measure of inflation
A good hedge against inflation, except extreme inflation and hyperinflation where any storable asset is a hedge.
So What Is It?
Measure of Faith in Central Banks
In addition to being money for thousands of years, the price of gold is primarily a measure of faith in central banks.
If you believe central banks have everything under control, don't buy gold.
But Why Have Faith?
If you believe monetary madness, negative interest rates, and negative rate mortgages prove central banks do not have things under control, then you know what to do.