Gold , dollar and cruide oil relation

[Ganesh]

Hi ,

I am new to commodity market . I want to know relation between gold , dollar and cruide oil . How there prices impact each other ?

Thanks in advance .

Ganesh

 

[nanabala]

Hi Ganesh,

If Gold prices are directly related to Crude and Dollar value.

1. Basically, Gold is an inflation Hedge. If inflation of any country ( Mostly Look at developed economies) increases, investors buys gold to balance their port folio. So, Gold will move up.

Ex: Now every one says US economy is in Stagflation. You can see what Gold is trading at?

2. Crude prices directly affects the oil import bill of any country. Increase in Imports Bill will increase the Trade Defict ( Export - Imports) of countries (Mainly watch out US Trade Deficit Data). Higher Trade deficit would hit the value of currency of the country. This will affect the money circulation in the economy there by leading inflation ( Here applies the logic of " Too much money chasing too few goods). So, If Crude price rises, Gold will also move Up.

3. As you know most of the countries has got Foriegn Reserves. And these reserves are in form of Dollars. For example, India boasts about 140 Billion Dollars of reserves. If the dollar looses value, the entire basket looses value. So, countries will look for safe heaven i.e.GOLD. If Dollar looses value, Gold will mpove Up.

Happy Trading
Nanabala
9986039019
bangalore

 

[Ganesh]

Hi Ganesh,

If Gold prices are directly related to Crude and Dollar value.

1. Basically, Gold is an inflation Hedge. If inflation of any country ( Mostly Look at developed economies) increases, investors buys gold to balance their port folio. So, Gold will move up.

Ex: Now every one says US economy is in Stagflation. You can see what Gold is trading at?

2. Crude prices directly affects the oil import bill of any country. Increase in Imports Bill will increase the Trade Defict ( Export - Imports) of countries (Mainly watch out US Trade Deficit Data). Higher Trade deficit would hit the value of currency of the country. This will affect the money circulation in the economy there by leading inflation ( Here applies the logic of " Too much money chasing too few goods). So, If Crude price rises, Gold will also move Up.

3. As you know most of the countries has got Foriegn Reserves. And these reserves are in form of Dollars. For example, India boasts about 140 Billion Dollars of reserves. If the dollar looses value, the entire basket looses value. So, countries will look for safe heaven i.e.GOLD. If Dollar looses value, Gold will mpove Up.

Happy Trading
Nanabala
9986039019
bangalore

Thank you very much Nanabala .

Warm Regards

Ganesh

 

[johnpro]

Is there some very good books in english to read about this and some analysis for Gold , dollar and cruide oil relation?
Need help

 

[lakhi2001anshul]

Is there some very good books in english to read about this and some analysis for Gold , dollar and cruide oil relation?
Need help

 

[irfanap_95]

Is there some very good books in english to read about this and some analysis for Gold , dollar and cruide oil relation?
Need help

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IRFAN

 

[investokick]

gotta love that oil....

 

[investokick]

Actually, I take that back. I hate oil.

 

[amarnath]

Hi,

Gold vs $ relationship is only a partial and dont tell you whole market picture by itself.And pls remember US $ is not predictor of gold direction always, and usually in real mkt condition gold leads $ in direction.

A fall in the dollar by itself does not signal a bull market in gold. A real gold bull market is when the yellow metal value grows in all currencies, not just the dollar.

Rather, what is more important for gold is the behavior of debt markets - the best proxy for financial markets risk.

And as far as crude is concerned its not correlated historically with gold market and its useless to find such correlation to trade pratically and only thing u might look is gold oil ratio to select some long term picks

 

[Ganesh P.S]

Good Evening to Sir/Madam