How Do Gold and Oil Prices Correlate?

 

How Do Gold and Oil Prices Correlate?

Gold is considered a safe haven asset, which means that it tends to thrive in uncertain or unstable conditions. Several factors can impact the spot price of gold, and the precious metal often moves opposite to traditional assets like stocks and bonds when faced with a similar set of stimuli. Few facts illustrate gold’s unique properties more than the relationship between gold and oil prices.

Especially during the 21st century, the spot price of gold has tended to correlate positively with the price of crude oil. This relationship can be deceptive, though. While gold and oil prices do tend to positively correlate, recent movements in the price of oil have been primarily due to heightened geopolitical tensions or war in the Middle East. And since war often drives gold prices higher because of its safe haven properties, the conflict behind oil price spikes may be playing a larger role in gold’s price increases than climbing oil prices themselves.

The gold market has a pretty complex relationship with the price of oil. On this page, learn more about how gold and oil prices correlate. Along the way, you’ll also learn some tips about how geopolitical events and tensions can impact the price of gold.

Oil-Gold Price Relationship

Oil and gold prices have a complex relationship. Generally speaking, the spot price of gold tends to increase in periods where the price of crude oil is climbing. This relationship can be deceiving, though, because the largest spikes in oil prices have often coincided with heightened military activity or conflict in the Middle East, which is home to much of the planet’s crude oil supply.

As a result, the price of oil often indirectly impacts the spot price of gold. While oil prices and gold prices can positively correlate, some of gold’s largest price spikes have instead correlated with war in the Middle East, which can be inflationary and drive safe haven demand for assets like gold and silver. In other cases, gold prices may increase when oil prices rise due to uncertainty, which also buoys safe haven demand.

To complicate matters even more, the spot price of gold and the price of oil are not always strongly correlated. Crude oil prices declined throughout most of 2025, for example, while the spot price of gold soared to multiple all-time highs throughout the year. Conversely, some years have seen gold prices retreat as the price of crude oil skyrocketed.

That being said, the positive price correlation between crude oil and gold is relatively well-established and observable for most of the modern market’s history.

Why Do Gold and Oil Prices Correlate?

Gold and oil prices tend to positively correlate for a few different reasons:

1. Uncertainty. Rising oil prices often point to global insecurity, given crude oil’s importance as a vital resource. This uncertainty drives investors to purchase safe haven assets like gold in order to mitigate their risk exposure.
2. War. For the past several decades, various armed military conflicts in the Middle East have strongly correlated with rising crude oil prices. Because war means heightened uncertainty and can lead to inflation, safe haven assets like gold tend to perform well during war. As a result, the same conflicts that drive the price of crude oil higher can lead to rising gold prices.
3. Inflation Hedge. Gold and oil are both considered hedges against inflation because of their intrinsic value and consistent demand. When uncertainty spikes, investors flock toward these assets to hedge against the risk of uncertainty, instability, and inflation. As a result, gold and oil tend to move in tandem when fears about inflation spike.

While the strength of the correlation between gold and oil prices can fluctuate, both assets are driven by similar geopolitical events and conditions – and a rise in the price of oil often similarly drives gold prices higher.

Oil, Gold Prices, and War

Both gold and oil prices jumped in February and early March of 2026 as tensions between the United States and Iran reached a boiling point. The United States conducted a series of strikes on Iran, killing Iranian Supreme Leader Ali Khamenei and leading to escalating conflict throughout the region. Crude oil prices jumped by nearly 15% in the five days that followed. While gold prices initially jumped on the news, the spot price of gold retreated as the week wore on.

In the longer term, gold prices tend to increase during periods of prolonged war. This is because of two main reasons. First, war signals uncertainty, which can drive investors to buy intrinsically valuable safe haven assets like gold or, in some cases, oil futures. This effect is compounded when the war in question poses a threat to oil supply lines, which can drive demand for the crucial resource.

Second, extended armed conflict requires oil and can drive inflation higher for involved nations. Battleships, aircraft, and a variety of other vehicles crucial to the war effort require oil, which can compound rising oil prices, especially when conflict breaks out in oil-producing countries. And during war, countries authorize more spending, increasing the national debt and worsening inflation for consumers.

Because gold is both inflation-resistant and a safe haven asset, it tends to perform well during war. And because of the hotbed of military activity in the Middle East, the world’s highest-producing continent of crude oil, conflict can drive gold and crude oil higher at the same time. While gold and oil prices are often correlated, they’re sometimes linked by a singular shared cause, rather than the price of one being directly driven by the other.

History and the Gold-Oil Price Relationship

The gold-oil ratio refers to the number of crude oil barrels that are equivalent in value to one troy ounce of gold. Despite gold’s relationship with oil prices historically, the gold-oil ratio can fluctuate considerably from year to year. This ratio spiked to historic levels to start 2026 as gold reached a fresh all-time high to outpace the price of crude oil per barrel.

Until the collapse of the gold standard in 1970, the gold-oil ratio was consistent for decades. However, the end of the gold standard and conflict in the Middle East, which produces much of the world’s oil, drove both oil and gold prices into a volatility that has persisted for over 50 years. While tracking the gold-oil ratio can give investors insight into general uncertainty and demand for either metal, this metric is not a foolproof measuring stick stackers should use to time their investments.

Gold Prices During War in the Middle East

War has long been a predictor of strong safe haven performance, but armed conflict in the Middle East has had a particularly outsized impact on the spot price of gold, as well as the value of crude oil. Conflict in the Middle East often poses a distinct threat to supply lines used to transport crude oil across the planet, and this oil itself is integral to the war efforts for most nations. As a result, both crude oil and gold prices have trended up as tensions rise in the Middle East.

Gold spiked at several points during 2025 as conflict broke out in the Middle East. The precious metal soared to an all-time high in June of 2025 after Israel and Iran exchanged rocket fire, and oil prices also spiked considerably on the news. And in early 2026, both crude oil and gold soared to fresh heights while the United States and Iran conducted military strikes on Iran.

Even before 2025, developments in the Middle East were often highly impactful to the spot price of gold and the value of crude oil. Around 30-31% of the total annual production of crude oil in the world comes from the Middle East. Even more astoundingly, some estimates find that the Middle East has more than 50% of the world’s total oil reserves. As a result, conflict in the Middle East can drive the price of oil higher by threatening supply lines, closing production and processing facilities, and causing investors to buy more stock in oil on speculation.

Exceptions to the Rule – Gold Prices Don’t Always Correlate With Oil Prices

Oil and gold don’t always strongly correlate. In fact, the gold-oil ratio has been highly volatile over the course of the last couple decades. Gold’s strongest correlation with oil came prior to 1970, when gold prices were still fixed. After the end of the gold standard globally and the emergence of larger regional conflicts in the Middle East, gold and oil prices remained somewhat correlated but far less consistent in their ratio.

Gold’s price performance in recent years has also complicated the gold-oil ratio considerably. In both 2020 and 2025, gold’s price spiked, outpacing the price of crude oil and causing the ratio between crude oil barrels and gold to quickly climb. When one of the two assets in this relationship spikes without a similar jump in the other market, this volatility undercuts the longstanding correlation between gold and crude oil prices.

Do Oil Prices or War Drive Gold Higher?

While there does exist a somewhat consistent correlation between crude oil and gold prices, a far larger impact on the price of gold comes from the outbreak of war. It is the case that many of the world’s most significant armed conflicts occurred in the Middle East, which coincidentally can lead to higher oil and gold prices, but this alone does not mean that gold will always increase in value when crude oil becomes more expensive.

Instead, gold often tends to spike in value when largescale conflicts break out between nations. This impact is often more pronounced when the wars in question occur in the Middle East, since Middle Eastern wars both threaten supply chains for a crucial asset (oil) and drive a flight to safe haven assets like gold among investors who wish to protect their assets against inflation and uncertainty.

Take a look at the historical gold price chart below to get a better picture of how gold prices correlate historically with the outbreak of war.

Oil prices tend to correlate strongly with the price of crude oil, but this relationship isn’t always guaranteed and often relates more to the outbreak of conflict than with the price of crude oil itself. As you can see, nearly every major outbreak of conflict in the Middle East over the past two decades has led to a spike in oil prices. If you compare this chart to the gold historical price chart listed above, you’ll notice that gold follows a similar trend, but with a bit less volatility. On a large enough timeline, however, gold prices and crude oil prices have been highly correlated in the months and years following a major outbreak of conflict.

So, what actually drives the price of gold in these historical cases? Is it the price of oil, or is it war that drives oil prices higher? Well, it’s a little bit of both. The wars listed on these charts happened in the Middle East, one of the regions responsible for producing a bulk of the world’s crude oil. When wars occur in this region, it threatens the supply and transit of crucial oil, driving oil prices higher. And because this causes uncertainty in a range of industries, the price of gold tends to increase as well.

Final Thoughts: How Do Gold and Oil Prices Correlate?

The relationship between gold and oil prices is an undeniable historical trend, but the reason for this correlation is a bit more complicated than it seems. Rapid spikes in the price of oil are often precipitated by renewed conflict in the Middle East, which coincidentally drives the price of gold higher as investors move to protect their holdings using the safe haven asset.

Additionally, both gold and oil are intrinsically valuable assets, which makes them a popular target for investors attempting to shield their assets against the threat of inflation – which war certainly buoys.

You might also be interested in:

• How Do Wars Affect Gold Prices? A 50-Year Analysis
• Recessions and Gold Prices | Historical Gold Price Charts and Analysis
• Is Gold Still an Inflation Hedge?