Oil decoupling from USD. Can gold decouple?
Historically, crude oil, gold and metal commodities have been inversely correlated with USD in such a way that if USD becomes strong then oil and metals prices decline and vice versa.
But if you observe the recent trend post covid then one can observe that crude oil prices have increased despite USD strengthening as US FED increasing interest rates and bond yields reaching historical high.
Now coming to gold and USD as international reserve currency some new developments are taking place in the world which can make the dominance of USD as international reserve and trade currency in jeopardy. Recently, BRICS+ group and many countries have expressed desire to do international trade with local currencies and not with USD and are trying to find some alternative
currency or payment mechanism based on gold. In this background, can we say that gold can be one of the choices in the future to be used as international currency or some alternative currency backed by gold ?
Besides, inflation remaining high can also prompt investors to repose faith in gold as hedge against inflation. So in my view, taking all these into consideration, I believe it’s time for gold to decouple from USD. As such despite USD remaining strong because of higher interest rates, I would reiterate buying gold and any price decline in gold should be used as buying opportunity.

