Why are international gold and crude oil prices positively correlated? The following is to provide you with the relevant knowledge introduction to why the international gold and crude oil prices are positively correlated:
- International gold and crude oil prices are priced in US dollars, and fluctuations in the US dollar exchange rate will directly trigger the same direction fluctuations in gold prices and oil prices;
- High oil prices exacerbate inflation, and inflation triggers a rise in gold prices;
- Changes in oil prices directly affect the operation of gold by oil-producing countries, which in turn triggers fluctuations in gold prices . Most of these major oil producing countries such as Saudi Arabia, Qatar, the United Arab Emirates, Kuwait, and Iran are concentrated in the Gulf region, and most of them are Arab countries, holding huge amounts of petrodollars. When international gold prices fluctuate, their operations on petrodollars often have the same direction;
In order to transfer risks, oil-exporting countries often invest a large part of petrodollars in the international financial market, and gold, as an excellent tool for risk aversion and investment preservation, is naturally within the scope of choice of these oil-exporting countries.
When oil prices rise, the petrodollars held by oil-producing countries will expand rapidly, so these countries will correspondingly increase the proportion of gold in their international reserves, increase the demand for gold in the international gold market, and then promote the rise of gold prices .