Tianfeng: The current gold-oil ratio is the second highest in history. After the extreme value regression, it is expected that the gold price will peak in 4-5 months.

Tianfeng released a research report stating that the current gold-oil ratio is at its second highest level in history, only second to the phase of negative oil prices due to the 2020 pandemic. The bank believes that the difference in pricing factors lies in crude oil being priced on fundamentals, while gold is priced macroeconomically. The Relationship between Gold-Oil and the US Dollar Index The price of gold has a long-term negative correlation with the US Dollar Index. Segmented regressions from 1986-2000, 2000-2020, and 2021-2025 all show a negative correlation. The relationship between oil prices and the US Dollar Index changed after 2020: regressions show that from 1988-2000, oil prices and the US Dollar Index were positively correlated; from 2000-2020, it became negatively correlated; and from 2021 onwards, it became positively correlated again. Gold has financial attributes, while oil has stronger physical attributes. Reasons for the Historical Regression of the Gold-Oil Ratio Firstly, the situation after 2000 is different from before. After 2000, the relationship between oil price vs. gold price to a certain extent showed a counter-correlation (weak USDX, weak oil prices and strong gold prices), therefore the gold-oil ratio after 2000 would show more extreme values with some degree of rationality. Secondly, every time the gold-oil ratio reached extreme values in history, it was due to a large drop in oil prices. The regression of extreme values is marked by tangible improvement and a rebound in oil prices. Thirdly, after the regression of extreme values, the price of gold peaks 4-5 months later (in March 2016, the gold-oil ratio hit an extreme value, and in August 2016, gold prices peaked after oil prices hit bottom. In April 2020, the gold-oil ratio hit an extreme value, and in August 2020, gold prices peaked after oil prices hit bottom. The rebound in oil prices represents economic recovery, and after economic recovery, loose expectations will be suppressed.) Risk warning: 1) Uncertainty of Trump administration policies; 2) Uncertainty in the macroeconomy; 3) Uncertainty in geopolitical situations.