Why have US shares, gold and the dollar been soaring?

The emergence of artificial intelligence has pushed the tech sector to all-time highs, but other assets have risen, too

The US stock market has been on a tear over the past two years. The S&P 500 has increased by roughly 40% since Joe Biden assumed office in January 2021 and, along with the Dow Jones and Nasdaq, is repeatedly setting new records. Moreover, the dollar has strengthened sharply against every major currency, while the price of gold soared to an all-time record of $2,470 an ounce earlier this month.

Economists and commentators have struggled to explain these trends. While the increase in gold prices could be attributed to elevated risk perceptions stemming from political and geopolitical uncertainties, this explanation does not account for the booming stock market. Conversely, the decline in the Vix volatility index since 2022 might explain the US stock market rally but not the increase in gold prices.