What is the relationship between crude oil, gold and the US dollar?


In recent years, oil speculation and gold speculation are very popular investment varieties, and both of them are affected by the trend of the US dollar. What are the correlations between gold, crude oil and the US dollar?

1、 Negative correlation between gold and US dollar

Based on the analysis, judgment and grasp of the global macro situation, the price of gold is priced in US dollars and is directly affected by the US dollar. Therefore, there is a great negative correlation between gold and US dollar

First of all, the appreciation or depreciation of the US dollar will directly affect the change of international gold supply and demand, which will lead to the change of gold price. From the perspective of gold demand, since gold is priced in US dollars, when the US dollar depreciates and other currencies are used to buy gold, the same amount of money can buy more gold, thus stimulating demand, leading to an increase in demand for gold, thus driving up the price of gold. On the contrary, if the U.S. dollar appreciates, gold will become more expensive for investors using other currencies, which will inhibit consumption and lead to a fall in gold prices.

Second, the appreciation or depreciation of the US dollar represents people's confidence in the US dollar. The appreciation of the US dollar indicates that people's confidence in the US dollar has increased, thus increasing their holdings in the US dollar, and relatively speaking, reducing their holdings in gold, thus leading to a fall in the price of gold; conversely, the depreciation of the US dollar will lead to an increase in the price of the US dollar.

It is worth noting that the negative correlation between us dollar and gold is based on the long-term trend, and from the short-term perspective, there are no exceptions. For example, the US dollar and gold rose simultaneously in the previous period. The main reason for this situation is that both of them are hedging products, and the increase in demand for hedging in the market may promote the synchronous rise of US dollar and gold.

2、 Positive correlation between gold and oil

There is a positive correlation between gold and oil, that is to say, gold price and oil price are usually positive. The rise of oil price indicates that the price of gold will rise, and the fall of oil price indicates that the price of gold will also fall.

The fluctuation of oil price will directly affect the development of the world economy, especially the U.S. economy, because the total economic volume and crude oil consumption of the United States rank first in the world. The economic trend of the United States will directly affect the change of the quality of American assets, which will cause the rise and fall of the US dollar, thus causing the rise and fall of the gold price. According to the estimation of the International Monetary Fund, every increase of 5 US dollars in oil price will reduce the global economic growth rate by about 0.3 percentage points, while that of the United States may decrease by about 0.4 percentage points. When oil prices continued to soar, the IMF also lowered its expectations for future economic growth. Oil price has become the "barometer" of the global economy. High oil price also means that the uncertainty of economic growth increases and inflation expectations gradually rise, which will push up the price of gold.

In the relationship among gold, oil and US dollar, the price of gold is mainly measured in US dollars, and so is oil. In the early 1970s, after the collapse of the Bretton Woods system, the world monetary system built after World War II, gold prices and oil prices both broke away from the fixed exchange ratio with the US dollar, resulting in a sharp rise in prices. There are close relations and checks and balances among the three. There is relative stability hidden in the fluctuation of each other, and absolute change exists in the surface stability. In the medium and long term, the fluctuation trend of gold and crude oil is basically the same, but the magnitude is different.

In the past 30 years, the price fluctuation of gold and oil in US dollar has been relatively stable. The average price of gold is about 300 US dollars / ounce, and the average price of oil is about 20 dollars / barrel. On average, the exchange relationship between gold and oil is about 16 barrels of oil per ounce of gold. This ratio peaked in the mid to late 1980s, with an ounce of gold trading for about 30 barrels of crude oil. However, due to the tight supply of crude oil, the price of crude oil rose sharply, while gold rose relatively during the same period. Up to now, 1 ounce of gold can only exchange for about 12 barrels of oil. Judging from the current exchange ratio between oil and gold, there is still room for the price of gold to rise.

3、 Negative correlation between us dollar and oil

The U.S. economy has been relying on oil and US dollar for a long time, and its seigniorage of US dollar and its monopoly position in the international settlement market have controlled the pricing power of US dollar; It also controlled the global oil supply and the price of oil by placing nearly 70% of the world's oil resources and major oil transportation channels under its direct influence and control through its super strong military force. In the long run, when the U.S. dollar depreciates, oil prices rise; when the dollar hardens, oil prices tend to decline

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