I see news so much on movement of oil and gold prices. Oil related inflation leading to a weaker dollar and higher gold prices as a hedge to dollar. What if we have alternate energy products reduces the dependency of the demand from oil simultaneously environmental effects changes consumer behavior leading reduced demand in oil.

In conjunction woes in the American economy stemming from sub prime crises continues leading to a further weakening of economy. Would the decrease in oil prices lead to decrease in gold price and strengthen the dollar? Though the relationship of oil and gold are known, there is a difference in impact and effects of both these commodities in the market place. A pure correlation is sometime too narrow focused on the direction.

Interestingly enough gold demand has increased at the current levels.