Crude oil and gold are largely linked to the dollar. The continuous rise of crude oil will lead to the depreciation of the dollar, which in turn will push up the price of gold. As a hedge against inflation, gold itself cannot be separated from inflation. Rising oil prices mean that inflation will follow, and so will the price of gold.
In addition, the relationship between gold and oil prices has also kept pace. This is mainly because the general increase in crude oil prices will lead to inflation, and once inflation expectations appear, international funds will try to find a safe haven. Sometimes, in order to transfer risks, oil exporting countries often invest a large part of petrodollars in international financial markets. Gold is naturally within the choice of these oil exporting countries because of its role in avoiding risks and protecting investment. During the period of rising oil prices, the petrodollars held by oil-producing countries will expand rapidly, so these countries will correspondingly increase the proportion of gold in their international reserves, increase the demand for gold in the international gold market, and then push up the price of gold. This is why the prices of gold and oil tend to keep the same direction.
Oil price rises → dollar purchasing power falls → dollar depreciation pressure → dollar holders run out of dollars → gold demand rises → gold price rises. This is just a simple causal analysis, without considering other factors. In fact, there are many factors that affect the rise and fall of gold prices.
Crude oil and gold are largely linked to the dollar. The continuous rise of crude oil will lead to the depreciation of the dollar, which in turn will push up the price of gold. As a hedge against inflation, gold itself cannot be separated from inflation. Rising oil prices mean that inflation will follow, and so will the price of gold.
In addition, the relationship between gold and oil prices has also kept pace. This is mainly because the general increase in crude oil prices will lead to inflation, and once inflation expectations appear, international funds will try to find a safe haven. Sometimes, in order to transfer risks, oil exporting countries often invest a large part of petrodollars in international financial markets. Gold is naturally within the choice of these oil exporting countries because of its role in avoiding risks and protecting investment. During the period of rising oil prices, the petrodollars held by oil-producing countries will expand rapidly, so these countries will correspondingly increase the proportion of gold in their international reserves, increase the demand for gold in the international gold market, and then push up the price of gold. This is why the prices of gold and oil tend to keep the same direction. References:
Huitong net