Let’s zoom in on our picture and see the daily chart.
On the above chart, we see that the July rally in gold took place along with a rally in crude oil. Both commodities declined after oil reached its new local top. From this point of view we can conclude that the corrective move in light crude triggered another move lower in gold.
Did this relationship last longer? Yes. The recent upward movement in oil took place at the same time as a rally in the yellow metal. However, this time gold was stronger and, contrary to oil, managed to break above the July top.
Summing up, in the past we saw the price of the yellow metal move higher along with the price of crude oil. As you read, there are periods when this relationship works (in the very recent past), but sometimes it fails (over the long run, in some short-term cases). Connecting the dots, the big question is: will the recent positive correlation remain in place in the near term? For now that seems to be the case, but gold is very close to its medium-term resistance levels after a major breakdown (which means that the medium-term situation is very tense at this moment) and at the same time the True Seasonal patterns suggest strength in the final part of the month. This powerful combination may change the very short-term link between gold and crude oil. It will be very important to watch how gold will react to big price moves in oil which we are likely to see in the not-too-distant future.