(Kitco News) - Unprecedented U.S. dollar strength has pressured commodity markets across the board, yet, despite its losses, gold remains one of the best performers in the precious metals complex, according to the latest research from Macquarie.

In a research report Tuesday, the Australian-based bank looked at the U.S. Dollar Index and its impact it has had on commodity markets. In the report they note that since May 2014, the start of the greenback’s bull run, the U.S. Dollar Index rose 25%, as of March 13. During that same period, gold prices have fallen 11%.

Although gold’s performance has been lackluster it has still outperformed silver, which according to their numbers has fallen 19% in the 9-month period; oil prices have declined 50% and platinum has fallen 22%.

Of the precious metals only palladium has outperformed gold, only losing 3% against a stronger U.S. dollar. The researchers note that out of the entire metals complex only aluminum has managed to withstand the U.S. dollar, showing a gain of 1% so far.

The researchers do admit that the cause and effect of a stronger U.S. dollar is not always clear as there can be many other factors influencing a commodity’s supply and demand dynamic.

“Sometimes these factors accentuate the impact of a dollar rally, e.g. if the dollar gains are because it is seen as a safe-haven from, say, slowing growth in emerging markets which traditionally buy a lot of commodities. At other times they can offset if –when the dollar is gaining on a stronger U.S. economy, which also means significantly stronger demand for some commodities, such as palladium and aluminium, where the U.S. has a large market share,” they said.

However, they add that a stronger U.S. dollar has enough impact on commodities to discourage potential investors – particularly gold and other precious metals.

Although the Macquarie analyst have described the U.S. dollar rally as “remarkable”, they do note that it could be close to reaching its pinnacle, as the Federal Reserve prepares to normalize its monetary policy and eventually lift rates either in June or September.

They note that although the Fed will eventually raise interest rates, it will be at a much more gradual pace than many are expecting; currency analysts at the bank are not expecting rates to go above 2% during this tightening cycle. If the central bank starts to raise rates in June, analysts said that the U.S. dollar could be close to its peak, “as market psychology shifts from anticipating that rate hikes are coming…”

“Such an outcome would be supportive for dollar commodity prices,” the bank’s commodity team said.

But those expecting to see a sharp reversal in gold, other precious metals or commodities in general on the back of a weaker dollar might be disappointed, added Macquarie.

“At the end of the day there are other factors behind commodity prices that are more important than the FX movements -the traditional ones that drive supply and demand,” they said. “Nevertheless, a steadier yardstick by which we – and most market participants – measure the strength of commodity prices will help restore investor confidence, and highlight more clearly the impact of those other factors on the underlying price.”

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