Gold dropped 56 dollars today. Oil crossed 118. Same day, opposite direction.
Gold usually runs with oil during geopolitical stress because both are hedges. When they diverge like this it usually means the market is repricing the type of risk. Gold down says inflation expectations are pulling back slightly, maybe rate hike fears. Oil up says physical supply disruption is getting worse not better.
If youre positioned in GLD or IAU expecting a straight safe haven run, today is a check on that thesis. If youre in XLE or OIH, the question is whether 118 oil destroys enough demand to cap the rally before it reaches you.
Baker Hughes said last week Hormuz stays closed through August minimum. Exxon CEO said Friday the market hasnt absorbed the full impact. KC-135 aerial refueling tankers in the Middle East nearly doubled since this morning which suggests sustained operations not a temporary show.
GLD down 1.2 percent and USO up 4 percent on the same Monday. The gold oil divergence is telling you something.
byu/Mother-Grapefruit-45 instocks
Posted by Mother-Grapefruit-45
7 Comments
Perhaps because GLD already went absolutely HAM and has no room left to run. While you’re looking for decoupling acts take a look at the SPY vs Job creation or the inversion of the yield curve from 2022-2024
Yeah, inflation. People need a hedge against inflation due to higher costs.
Countries selling gold reserves to buy oil. Revolution due to transportation being shut down is more important than gold
China has been selling off US treasury bonds for gold for years. They are now trading some of that gold for oil. You are welcome.
It’s called sustained inflation on a secular level
Gold has be inverse of oil for months.
People buy gold when they are worried about tomorrow. People sell gold when they are worried about today.