Why do gold and crude price rise and fall together?

Question

Why do gold and crude price rise and fall together?

Answer 1

It is very simple. The pattern now is stock markets and commodity markets now move in opposite direction. When shares come down gold and crude moves up and vice versa.

Answer 2

Some currencies are tied closely to oil prices and other commodity prices.  Oil prices on the nymex dropped a lot today.

Answer 3

They move in sympathy with all commodities because they react and respond to the strength/weakness of the dollar vs. other currencies.

Answer 4

Oil directly effects inflation and is a limiting factor on overall economic growth.

Gold is commonly viewed as a way to hedge against inflation, and an alternative to the US Dollar (and other currencies).

Therefore when oil prices rise from either speculation or supply and demand it is a cause for increased inflation.

When inflation rises the value of currency (dollar) drops.

When inflation rises and the value of the dollar drops, people try to find alternatives...  and the most popular is gold.

So... when oil prices go up the correlation is that inflation is going up, so gold goes up, and inversely the value of the dollar drops.  

And vice versa... when oil goes down that equals less inflation, so gold goes down, and inversely the value of the dollar rises.

And it doesn't have to be oil.  

Political scandal, unemployment, housing market, anything that measures the faith and confidence in a nation, etc. can all devalue that nation's currency.  

And when currency is devalued, the most popular alternative is investing in gold.

Thanks !

Answer 5

both hedge against infaltion and dollar.