RELATIONSHIP BETWEEN GOLD PRICE AND CRUDE OIL PRICE

WITH RESPECT TO CURRENT ECONOMIC SITUATION

UNIVERSITY OF PETROLEUM & ENERGY TRADING

INTRODUCTION

Methodology

RESULTS

1. Regression model on crude oil prices and gold prices:

Y = 138.3426 + 6.782921 β

In this formula the crude price will be taken as X and the gold prices in will be treated as dependent variable Y.

Here α is intercept coefficient and β is variable coefficient. The sign of ε is used for error term.

2. Gold-Crude oil ratio

Gold-Oil Ratio = Price of Gold (per oz.) / Price of Crude Oil (per barrel)

a) Regression model on crude oil prices and gold prices:

Analysis

b) Correlation between Crude Oil and Gold in various years

0

200

400

600

800

1000

12001/

1/19

701/

1/19

731/

1/19

761/

1/19

791/

1/19

821/

1/19

851/

1/19

881/

1/19

911/

1/19

941/

1/19

971/

1/20

001/

1/20

031/

1/20

06

Crude Prices (X)

Gold Prices (Y)

From 1970 - 1980

From 1980 - 1990

From 1990 - 2000

From 2000 - 2008

Conclusion

Positive relationship between crude oil prices and Gold Prices.

R Square shows 84% change in gold prices due to change in crude oil prices.

Ratio between gold prices and crude oil prices also shows the same.

But during this crisis relationship is negative

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