Intermarket Analysis: How Gold, Oil, and the Dollar Signal Each Other

Intermarket analysis is the practice of studying relationships between different markets — rather than analyzing an instrument in isolation — on the reasoning that markets don't move independently of each other, and that a move in one can sometimes provide an early signal or important context for another.

Gold offers one of the clearest examples. Gold has historically shown a general tendency to move inversely to the US dollar, since gold is priced in dollars globally — a weaker dollar makes gold cheaper for holders of other currencies, which can increase demand and push gold's price up, and vice versa. Gold also tends to respond to real interest rates (interest rates adjusted for inflation): falling real rates tend to reduce the opportunity cost of holding a non-yielding asset like gold, historically supporting its price, while rising real rates tend to have the opposite effect.

Oil offers a different set of relationships. Because oil-exporting economies earn revenue in US dollars, a weaker dollar can make oil relatively cheaper for buyers using other currencies, sometimes supporting oil demand and price — a similar dynamic to gold, though generally less consistent. Oil prices also flow into currencies of oil-exporting nations directly — the Canadian dollar, for example, has historically tended to strengthen alongside rising oil prices, since Canada's export revenue is meaningfully tied to oil.

Using these relationships in practice means treating a move in one market as a piece of context for another, not a guaranteed prediction — correlations shift over time as underlying economic relationships evolve, and they can break down for extended periods. The practical value of intermarket analysis is less about mechanically trading one market off another and more about avoiding surprises: recognizing when a move in gold, oil, or the dollar might be relevant context for a position in a related market, rather than analyzing each market as if it exists in total isolation.