Top Gold Consultancy Warns of Overstating Price Correlation Between Gold and Oil

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The group points out that the apparent links between the price of gold and various other assets display "significant" variation over time.

In GFMS' latest annual survey of the gold market, as well as the usual in-depth study of the fundamental dynamics of the market, the consultancy runs a series of individual features considering specific elements of the market. Included among these are a consideration of both the gold price movement correlation with currencies and commodities and investment activity in the commodities sector.

The group points out that the apparent links between the price of gold and various other assets display "significant" variation over time. This is amply borne out by the summary tables resulting from the analysis of log-returns in the daily price of gold, the US dollar:euro and dollar:yen rates, energy prices (using West Texas Intermediate as a proxy) and the CRB (Commodity Research Bureau) Index as an indicator for the overall commodity complex.

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