I read article and it always said that “the gold set new higher price of… usd/ounce as the support of oil price rally” Can anyone give me some reasons why oil price increase leads to gold price rise. Thanks a lot!
inflation from oil. Gold is usually accumulated to protect against inflation, I never quite understood why… but i guess it is.
They might be now but it’s not always so. One factor is that both are priced in dollars and the dollar is getting killed. There is no chance that you can use changes in one to predict the other in a tradable way.
JoeyDVivre Wrote: ------------------------------------------------------- > They might be now but it’s not always so. One > factor is that both are priced in dollars and the > dollar is getting killed. There is no chance that > you can use changes in one to predict the other in > a tradable way. -Additionally demand for Oil from developing countrues, especially China, is quite going through the roof. -The cricis in Nigeria (oil rich Niger Delta Region) is not improving, -So one would ask why wouldnt OPEC increase oil production? Well, they too want to make money until it “really” becomes unbearable-go figure that. I think that is all they care. -And last but not the least Speculators and hedge funds who will fuel the fire to cash in on this misery.
They discussed this on Kudlow and Co. the other night. The debate was whether there was any correlation between the two and if there was was the price of gold (priced in oil) mean reverting? If you do think they’re mean reverting than either gold will go up in the future or oil will go down. Obviously oil seems to be the overpriced asset. http://www.incrediblecharts.com/economy/gold_oil_ratio.php
Thank you for your opinions. Sometimes, gold mining company reported that their operating cost increase as energy price rising. It said that the cash cost per ounce of gold increase over years during period of oil price rising. And oil plays the important role of all mining activities. Oil needed to run all mining equipment and transportation from mine to refining territory. So on and so forth. Do you think that the direct relationship between oil price and gold price? I have never checked it out by looking at oil mining company financial statement or break out the cost structure of gold mining company to find out whether its mining cost is directly affected by oil price or not. Do you have any clue of this oil gold price relation?