A Forbes blog writer, Agustino Fontevecchia, notes the quantity of dollars (aka money supply) influences the dollar price of gold.
Another interesting approach is to look at money supply and measures of the money stock. Since September 2008, the U.S. monetary base has increased by more than 200% [tripled!], compared with a rise in the price of gold of about 70% [almost doubled]. â€œIf the two had been directly related, gold should already have risen to around $2,800.â€ (Watch Like Gold But Can’t Handle The Volatility, Check Out The Miners).
Looking only at M2, the U.S. broad money aggregate, it has only risen 20% in that time period. â€œThe ratios of gold prices to US M2 and nominal GDP are already some way above their long-run averages,â€ reads the report.