The price of crude oil and the price of gold are often considered to be related as they are both seen as commodities and can be influenced by similar economic factors.
One way they can be related is through inflation. When inflation is high, the prices of both crude oil and gold can increase. This is because investors often turn to commodities such as gold and oil as a hedge against inflation.
Additionally, geopolitical events and economic uncertainty can impact both crude oil and gold prices. For example, disruptions in oil supply can lead to higher oil prices, and during times of uncertainty, investors may turn to gold as a safe-haven asset, causing its price to rise.
However, it's important to note that while there can be correlations between the two, they are ultimately different commodities with their own unique supply and demand dynamics, so their prices can move independently of each other as well.
Gold is often thought to be an inflation hedge, and so oil and gold each have an inflationary relationship. Higher oil prices tend to lead into higher inflation expectations, which tends to result in lower real interest rates in the US. Low or lower real interest rates results in higher prices for gold as it is a non-yielding asset. Sharp movements higher in the the oil price typically have the greatest impact on gold, particularly if coupled with geopolitical events that threaten the supply of oil. Higher oil prices may also increase the cost of mining gold
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