Saturday, June 9, 2018

Some may believe that the positive relationship between gold and oil starts at the first. If gold prices rise, the dollar will weaken because of their direct correlation. Therefore, the weakness of the US dollar will lead to higher oil prices because the latter is also linked to the dollar. But who believes that lost his right side! The truth is quite the opposite, where the positive relationship between gold and oil begins at the latter, which means that the more oil prices have increased the price of gold, and analysts support this idea to the following facts:
With a brief historical look at the price action witnessed by the price of oil during the boom, gold prices were also moving upwards.

 The rise in oil prices leads to an improvement in the level of national income of the producing countries, which means high per capita income and then improve the standard of living, the individual becomes more able and financial solvency to buy basic needs and necessary, as well as the purchase of luxuries, including gold. With gold buying, demand will increase and prices will rise.

If an individual's income level improves, his or her need for a sense of security and financial stability increases, thereby increasing his appetite for gold as a safe hedge against crises, which increases its value as demand increases.
 
The big speculators on the international gold exchanges are seeking to raise the price of gold in order to absorb the increase in the proceeds of oil revenues resulting from high oil prices. 


As for the relationship of gold to currencies, specifically the US dollar, we find that this relationship is inverse, since it is the main currency recognized since the end of the Second World War to pricing most of the global commodities such as gold, silver, copper, wheat, oil, If the prices of those goods increase because of low supply or demand, the purchasing power of the dollar will decline or increase. But which is better to own oil or own gold? The difference between this and that is consumption. Oil consumes about 80 million barrels daily, and experts predict that it will be depleted sooner or later.

Gold is a permanent product, but that does not mean gold mines can not be depleted in turn, but the fact that the gold product is durable will make it better for the dispossessed. Experts have increased its price over the years especially against the US dollar.

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