Don’t Believe This Common Myth About the Oil and Gold Prices Relationship

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Since both commodities are priced in U. S. dollars, there’s a common myth among investors that the oil and gold prices relationship is defined by lockstep price movements.
When the U. S. dollar rises in value, most dollar-denominated commodities like oil and gold become more expensive. That means a gaining dollar can pull oil and gold prices lower because those commodities are more expensive to foreign currency users.
This is why market logic often asserts that oil prices and gold prices move in tandem with one another. If one goes down, the other also goes down – and vice versa.
However, as this chart below will show you, oil and gold don’t always move in the same direction despite both being priced in dollars…

This post was published at Wall Street Examiner by Alex McGuire ‘ May 5, 2017.