Oil Price and Gold Price: What's the Connection?

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Despite gold’s recent ascent above $860 per ounce, UBS noted that the current ratio is relatively low on a historical basis at 8.8x. So if oil remains near or above $100 this year, and the gold/oil ratio gets closer to its 10x long-term average, UBS thinks gold could move up toward $1000 per ounce.

Even if you were still on vacation last week you probably heard about oil hitting the $100 per barrel mark and gold climbing to an all-time high once or twice. But while oil has jumped nearly 80% in the past year, gold has appreciated less than half as much, according to UBS Securities.

So what impact does the price of oil really have on gold?...

Despite gold’s recent ascent above $860 per ounce, UBS noted that the current ratio is relatively low on a historical basis at 8.8x. So if oil remains near or above $100 this year, and the gold/oil ratio gets closer to its 10x long-term average, UBS thinks gold could move up toward $1000 per ounce.

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