Gold set to explode? Ray Dalio warns Russian sanctions could shatter the U.S. dollar

Billionaire investor Ray Dalio warned on microblogging site X on Friday that U.S. sanctions on Russia’s oil giants could trigger a global financial ripple, weakening the dollar and boosting gold. “History and logic have made clear that sanctions reduce the demand for fiat currencies and debts denominated in them and support gold,” Dalio said, pointing to past episodes where economic warfare reshaped global monetary dynamics.

Dalio’s comments follow Washington’s imposition of fresh sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, over the ongoing war in Ukraine. The move has stoked supply concerns, driving oil prices higher earlier in the week, though Brent crude eased 36 cents to $65.63 per barrel and U.S. West Texas Intermediate fell 33 cents to $61.43 on Friday morning.

“Throughout history, before and during shooting wars, there have been financial and economic wars that we now call sanctions,” Dalio noted, adding that when a debtor refuses to pay its obligations, it can financially hurt the creditor but also weaken its own currency and debt, an effect magnified when the reserve currency of the world’s leading power is involved.

Gold prices have been volatile in response to these developments. Spot gold was down 0.2% at $4,118.68 per ounce early Friday, on track for its first weekly decline in 10 weeks, pressured by a stronger dollar and pre-U.S. inflation positioning. U.S. December gold futures fell 0.3% to $4,133.40 per ounce.

Dalio emphasized gold’s enduring role as a non-fiat currency, stating it “remains securely held and universally accepted,” and historically appreciates during periods of currency stress and low interest rates. Investors are closely watching gold as a hedge, particularly with expectations of U.S. Federal Reserve rate cuts later this month.

The dollar index, which tracks the greenback against a basket of currencies, gained for a third straight session to 99 on Friday, making bullion more expensive for holders of other currencies. Trade tensions between Washington and Beijing have also heightened, adding layers of uncertainty to global markets.Dalio’s warning reinforces a growing narrative that geopolitical and economic shocks, like sanctions on Russia, can ripple far beyond the target country, affecting reserve currencies, debt markets, and safe-haven assets like gold. “The holding and price of gold rise,” he wrote, “as it is a non-fiat currency that remains securely held and universally accepted.”

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