Crude oil prices continue to spiral downward, much to the chagrin of oil tycoons everywhere. Now, many investors are wanting to know how other commodities, specifically gold, will be impacted as a result.
Barrels of crude fell below $50 on Wednesday (Feb. 4), according to Reuters. Investors expected gold prices to rise, but the metal was hampered by other factors:
“Gold pared gains after rising 1 percent on Wednesday, losing its safe haven appeal on falling oil prices after the precious metal initially garnished support from China’s central bank’s move to stimulate its flagging economy.”
The takeaway: Although low oil prices have strengthened gold’s appeal as a safe haven in recent weeks, the two commodities are not always conversely interconnected. The same holds true with paper currency, as well.
As one Australian news agency reports:
“It’s also a financial myth that gold and the US dollar always move in opposite directions, like some law of physics.”
They go on to say:
“On the contrary, gold and the greenback can move in the same direction when the world is looking for financial safe havens, as it seems to be.”
Read the full story here.
Photo courtesy of the Canberra Times