Gold Price Forecast
Gold Prices Forecast
As we all know that gold prices are fluctuating widely over the last few years, and a wide increase in the bullion rates has been recorded. According to economists and forecasters, there are different reasons of this widespread increase in gold prices. Most of them say that this is because of the relationship between crude oil and gold. And because of this correlation between prices of oil and gold, the gold prices are constantly changing but its not the only reason these days, other ingredients are also helping these price shifts to occur.
▪ Gold and Oil correlation:
According to many experts, Gold, oil and US dollar are correlated with each other. There are three theories given in this regard. ➢ First says that when oil price rises, investors look for other sources to invest such as gold which intern increases gold price, so oil indirectly affects gold prices. ➢ Second one says that expensive oil reduces the profit margins of gold mine companies because oil is used for extraction of gold, which increases gold prices. ➢ According to third one, as gold and oil both are traded in US dollars so their price depends on the strength of the currency. Therefore, we can say that both commodities show similar trend in prices because they are driven by the inflation rate in the economy.
But this correlation has not proved to be right for short time period, as is reliable for measuring data for longer periods such as from 1964 to 1995, this correlation proved to be very accurate with a positive reading of 0.877,but from 1995 to 2000, it almost vanished showing negative reading of 0.133.The same phenomenon is occurring these days, as oil is fluctuating and came to 86 dollars/ barrel from the peak of 103 dollars, but contrary to it, a constant rise in gold is recorded from 1,500 dollars/ounce to 1,687 dollars and now it’s on 1651 dollars, so we can say that gold and oil are not always interrelated but it’s
As we all know that gold prices are fluctuating widely over the last few years, and a wide increase in the bullion rates has been recorded. According to economists and forecasters, there are different reasons of this widespread increase in gold prices. Most of them say that this is because of the relationship between crude oil and gold. And because of this correlation between prices of oil and gold, the gold prices are constantly changing but its not the only reason these days, other ingredients are also helping these price shifts to occur.
▪ Gold and Oil correlation:
According to many experts, Gold, oil and US dollar are correlated with each other. There are three theories given in this regard. ➢ First says that when oil price rises, investors look for other sources to invest such as gold which intern increases gold price, so oil indirectly affects gold prices. ➢ Second one says that expensive oil reduces the profit margins of gold mine companies because oil is used for extraction of gold, which increases gold prices. ➢ According to third one, as gold and oil both are traded in US dollars so their price depends on the strength of the currency. Therefore, we can say that both commodities show similar trend in prices because they are driven by the inflation rate in the economy.
But this correlation has not proved to be right for short time period, as is reliable for measuring data for longer periods such as from 1964 to 1995, this correlation proved to be very accurate with a positive reading of 0.877,but from 1995 to 2000, it almost vanished showing negative reading of 0.133.The same phenomenon is occurring these days, as oil is fluctuating and came to 86 dollars/ barrel from the peak of 103 dollars, but contrary to it, a constant rise in gold is recorded from 1,500 dollars/ounce to 1,687 dollars and now it’s on 1651 dollars, so we can say that gold and oil are not always interrelated but it’s