The gold-to-oil ratio measures the relationship between the price of gold and West Texas Intermediate (WTI) crude oil. WTI is a key benchmark for oil pricing, alongside Brent and Dubai Crude. The ratio provides insights into economic trends and global market behaviour. A higher ratio shows that gold is more expensive relative to oil, while a lower ratio indicates the opposite.
Why the gold-to-oil ratio matters
The gold-to-oil ratio helps track the relative strength between gold and oil. When the ratio is high, it may point to periods where demand for energy, represented by oil, is low, or when investors seek safe assets like gold due to economic uncertainty. A lower ratio suggests higher demand for oil or stable economic conditions.
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Gold-to-oil ratio trends from 1946 to 2024
Below is a summary of the gold-to-oil ratio across different decades, reflecting global economic shifts, data sourced from Macrotrends.
1946: The gold-to-oil ratio stood at 29.91. The post-World War II period saw fluctuations as countries rebuilt their economies. The oil demand started to grow, but gold maintained its status as a stable store of value.
1950: The ratio dropped to 13.62. Economic growth picked up, spurred by industrial expansion and increased oil consumption. This shift reduced the comparative value of gold relative to oil.
1960: The ratio decreased further to 11.89. This was a time of economic growth, with stable energy markets and rising industrialisation.
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1970: The ratio was at 10.91, continuing the trend of the previous decades. This period marked steady energy demand and a stronger focus on growth across different economies.
1980: The ratio rose to 20.86. This increase was influenced by the energy crises of the 1970s, which drove oil prices up. Gold also surged as inflation and geopolitical tensions made investors seek safe assets.
1990: The ratio settled at 18.10. The global economy faced mixed challenges, including political changes and oil market adjustments.
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2000: The ratio was 10.29. This period saw relative stability in oil prices and increased interest in new economic opportunities with the advent of technology.
2010: The ratio climbed to 14.80. This was after the global financial crisis of 2008, which affected economies worldwide. The crisis led to significant demand for gold as a safe asset, pushing the ratio higher.
2020: The ratio peaked at 30.66. The COVID-19 pandemic disrupted energy demand, leading to sharp declines in oil prices. Gold rose as investors sought refuge during economic uncertainty.
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2024 (January): The ratio was at 26.88. The post-pandemic recovery influenced oil demand, but the market still saw cautious investment in energy sectors. Gold retained its appeal as economic risks persisted.
2024 (November): The ratio surged to 39.06. Recent months show a high level of uncertainty. This could be due to global economic challenges, such as geopolitical tensions, financial policy shifts, or other factors impacting investor behaviour and energy demand.
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