Gold and crude oil are natural resources with intrinsic value. But is there a real link between these two asset classes? Let’s find out!

For decades, investors believed gold and oil prices moved in lockstep: if one rose, the other fell. In reality, that relationship has broken down. Today, the gold–oil ratio tells a far more complex story, shaped by different economic forces, investor behaviour, and global transitions. Let’s look at the facts, what’s changed, and what it means for your portfolio.

The Historical Gold–Oil Correlation: From Myth to Modern Markets

In the 1970s and 1980s, oil prices were widely viewed as a barometer of inflation. When oil rose, inflation followed, and gold, the traditional inflation hedge, often climbed too. This created the illusion of a fixed connection between the two commodities.

But the world changed. Since the 2008 financial crisis, and especially through the pandemic and energy transition, the relationship has weakened. Their prices now respond to different, often opposing, forces e.g. central bank policy, interest rates, supply shocks, and shifts in global demand.

What the Data Says 1987–2025

Over the past 40 years, both gold and oil have risen sharply, but not equally:

Gold has clearly outperformed oil as a store of value. Oil’s volatility has been far greater, with price swings driven by OPEC policy, geopolitical events, and global demand cycles.

Economists measure correlations between –1 and +1:

• 0 to ±0.2 = no correlation
• ±0.4 to ±0.6 = moderate
• ±0.8 to ±1 = strong

From 1987 to 2025, gold’s weekly correlation with oil has been negligible:

• Gold–Brent +0.21 Gold–WTI +0.19

In the last two years, that has turned negative:

• Gold–Brent –0.60 Gold–WTI –0.45

In other words, gold has tended to rise while oil has fallen, especially during bouts of economic uncertainty.

(Source: U.S. Energy Information Administration www.eia.gov)

A Snapshot of 2025

• Gold price: $3,900/oz (October 2025, Gold Avenue) Check live prices at Gold Avenue.
• Oil price: Brent Crude and West Texas Intermediate (WTI) are ~$65 per barrel (October 2025)
• Gold–Oil ratio: ≈ 60 barrels per ounce, well above the 20-year average (~22)
• UK inflation: 3.8 % supporting continued demand for gold as an inflation hedge (September 2025, ONS)

One ounce of gold now buys roughly 9,540 litres of oil, underlining just how far their relative values have diverged.

Why Gold and Oil Move Differently

Their uses and drivers are fundamentally distinct, which explains why any past correlation was circumstantial rather than structural.

What This Means for Investors

Instead, investors should monitor gold’s real drivers:

• Interest rates & central-bank policy: this influences opportunity costs and reserve strategy.
• Inflation & currency trends: high inflation or weak currencies boosts gold.
• Geopolitical risk: wars or crises amplify safe-haven demand.
• Market sentiment: investor psychology often dictates short-term moves.

With UK inflation still near 4% and rates elevated, gold priced in sterling remains close to record highs, reinforcing its role as a diversifier independent of oil volatility.

The Bottom Line

The once-popular belief that gold and oil prices move in opposite directions is no longer valid.

📊 Data Proof Point: there is little to no long-term correlation, and in recent years, even a negative one.
💡 Reality: they follow separate paths, shaped by entirely different economic forces.

For long-term wealth preservation, gold continues to stand out, delivering higher real returns, lower volatility, and resilience across cycles.

To navigate uncertainty, many investors use cost averaging: buying gold at regular intervals to smooth price swings and steadily build savings.

Discover Gold Avenue’s range of gold bars and coins, follow live market charts, and see how gold fits into your diversified portfolio, independent of oil’s ups and downs.