Gold and oil in an inflationary decade
Two classic hedges, two very different stories. How to think about real assets when the price level won't sit still.
- →Gold trades on real yields more than on inflation prints.
- →Oil is a supply story first, a demand story second.
- →Correlations break exactly when you need them most.
When the price level refuses to settle, attention turns to real assets. But gold and oil — the two reflexive hedges — march to very different drummers.
Gold is a real-yield trade
Bullion's enemy is the real yield. When inflation-adjusted rates rise, the opportunity cost of holding a non-yielding asset bites. That's why gold can fall in an inflationary scare if yields rise faster.
Oil is supply, then demand
Crude is a geopolitical and inventory story before it's a macro one. Production decisions and shipping routes move it more violently than CPI ever will.
Mind the correlation
The relationships you rely on tend to break in the regimes you're hedging against. Position with that fragility in mind.
For information only — not financial advice. Trading involves risk and may not be suitable for all investors.
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Trading foreign exchange and CFDs carries a high level of risk and may not be suitable for all investors. You could lose more than your initial deposit.