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The synchronized and exceptional price performance of oil and gold: Explanations and prospects
Curtin University, Kent Street, Bentley, Perth.
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Social Sciences.
2017 (English)In: Resources policy, ISSN 0301-4207, E-ISSN 1873-7641, Vol. 54, 81-87 p.Article in journal (Refereed) Published
Abstract [en]

This paper compares the global markets for gold and oil so as to explain the surprisingly high correlation of the two materials’ prices since 1970, and the exceedingly impressive rise of both price series compared with that of virtually all other primary commodities. We propose that developments in the oil market, and the resulting effects on the macroeconomy, influenced investment activity in gold, thus providing the most plausible explanation for the two commodities’ price synchronization. Our view on the extraordinary price increases of oil and gold, compared to a broad category of metals and minerals, is that oil prices rose first based on above-ground hurdles that restrained the capacity to produce, and gold prices then reacted as they were pushed up by rising safe-haven investment to store value – an attribute not shared by other metals and minerals. The paper also comments on the likely future price evolution of these important materials, arguing that oil prices will stagnate at levels observed from late 2014, or even weaken in the coming decades, but that gold prices will continue to ride relatively high – thus leading to a collapse of the oil/gold price connection.

Place, publisher, year, edition, pages
Elsevier, 2017. Vol. 54, 81-87 p.
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:ltu:diva-65803DOI: 10.1016/j.resourpol.2017.09.005OAI: oai:DiVA.org:ltu-65803DiVA: diva2:1144036
Note

Validerad;2017;Nivå 2;2017-09-25 (andbra)

Available from: 2017-09-25 Created: 2017-09-25 Last updated: 2017-11-24Bibliographically approved

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CiteExportLink to record
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