The U.S. Dollar Faces Mounting Pressure: Jeff Gundlach Outlines a New Investment Roadmap

Jeff Gundlach, CEO of DoubleLine Capital and widely known as the “Bond King,” has once again shared his cautious outlook on the global economy. This time, his focus is on two critical developments: rising inflation and the weakening U.S. dollar.

In an interview with CNBC this week, Gundlach expressed concern over the Federal Reserve’s recent rate cut of 25 basis points and the growing divide within Fed officials’ views. What stood out to him was that one official suggested the equivalent of five rate cuts could happen within the next two meetings.

“That is quite alarming for inflation prospects,” Gundlach warned, emphasizing that cutting rates too aggressively could reignite inflationary pressures.

At the same time, Gundlach noted a growing “anti-dollar” trend worldwide, with investors and governments increasingly moving away from U.S.-denominated assets. He confirmed that DoubleLine has already begun shifting away from dollar-based holdings, citing mounting U.S. debt and declining global demand for the greenback.

“I don’t like U.S. equities as a dollar-based investor. I’ve felt this way all year,” Gundlach said. “Many of my portfolio strategies revolve around a weaker dollar.”

Amid this environment, the “Bond King” highlighted three key investment strategies he believes are best positioned for the months ahead.

1. A Heavy Allocation to Gold

Gundlach strongly advocates for gold as a cornerstone of investment portfolios. Despite the metal trading near record highs, he believes its momentum remains robust in 2025, following a sharp rally earlier in the year and a steady consolidation phase through the middle of the year.

“Gold plays an essential role in a portfolio,” Gundlach stressed, recommending that investors allocate up to 25% of their holdings to gold. He likened the precious metal to an insurance policy, gaining value as the dollar weakens.

Gundlach even made a bold prediction: gold prices could surpass $4,000 per ounce by the end of 2025 if current trends persist.

2. European Equities as a Hedge Against Dollar Weakness

Another area Gundlach favors is European stocks, which have already shown resilience as the U.S. dollar has declined.

The U.S. dollar index, which tracks the greenback against a basket of foreign currencies, has dropped roughly 11% year-to-date. In contrast, the EURO STOXX 50 index — representing top blue-chip stocks across the Eurozone — has risen more than 10.8% in the same period.

According to Gundlach, this performance underscores the appeal of European markets as investors seek alternatives outside the U.S. “When the dollar weakens, international equities tend to outperform. Europe stands out as a logical choice,” he said.

3. Asian Stocks — But Steering Clear of China

For diversification beyond the U.S., Gundlach also recommends Asian equities, though he is wary of Chinese assets.

“There’s too much tension with China. If the market rallies, you may not even be able to repatriate your capital,” Gundlach cautioned, pointing to Beijing’s strict capital controls. “I don’t like the risk-reward balance there at all.”

Instead, he suggests exposure to broader Asian markets through funds such as the iShares MSCI Emerging Markets Asia ETF, which has surged 27% year-to-date. This growth, he noted, highlights the region’s strong potential compared to more volatile Chinese markets.

Looking Ahead

Gundlach’s warnings come at a time when global investors are grappling with uncertainty. Inflationary pressures remain persistent despite central bank easing, while the long-term strength of the U.S. dollar is increasingly in question.

His three-part roadmap — gold, European equities, and selective Asian markets — reflects a broader theme: repositioning portfolios for a world less dominated by the U.S. currency.

As Gundlach summarized, “We’ve reached a point where the old playbook no longer works. Investors need to think globally and prepare for a weaker dollar environment.”