Oil futures are a specific type of contracts that are used in the modern economy. Buyers and sellers of crude oil enter the agreement to deliver a certain amount of physical substance on a determined period in the future (McNally, 2017). The price is also established during the negotiations.
As for the gold futures contracts, they can be viewed as the most important tool for actors operating in different industries and the users of goal as they establish the global price and provide new trading opportunities. Thus, gold is usually traded in U.S. dollars per ounce (Tucker, 2020). If there is a price of $700 per ounce, the whole contract will have a value of $70,000. In such a way, it becomes a potent tool of the international economy as it helps to become less depended on inflation rates and other currencies.
However, the change in the price for gold futures contract directly affects different industries, including the oil one. From the graph, one can see that the decrease in the value for gold contracts preconditions the corresponding decline in the value for oil contracts. It occurs mainly because the U.S dollar is also used in deals between crude oil producers and consumers (Tucker, 2020). When ounce is traded differently, and buyers are ready to pay more or less, the value of the dollar also alters, and, at the same time, the oil futures start to adapt to new conditions.
In such a way, it is possible to conclude that there is a direct correlation between gold and oil future contracts. The gold is viewed as a universal determinant of value and price of different products. That is why the change in its ratings result in the reconsideration of deals between various partners.
References
McNally, R. (2017). Crude volatility: The history and the future of boom-bust oil prices. New York, NY: Columbia University Press.
Tucker, E. (2020). Why gold? Why now?: The war against your wealth and how to win it. New York, NY: Midas Capital Partners.