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Even at the spot price of gold of $1,477 after the NY close the ratio is 16.18, indicating that oil remains on sale relative to gold.
Gold closed at $1501.40, well below what is understood to be a key support level of $1,521. There is talk of price falling to below $1,300 by early 2014.
At current prices of oil around $90, $1,300 gold would be an attractive buy, but it remains to be seen if oil can remain that expensive in a period of reduced demand due to chronic, severe unemployment, increasing domestic supply from oil shales, replacement of diesel with natural gas and increased passenger vehicle efficiency standards.
Rising dollar strength from early February to as high as 83.22 on the index in late March may well be the result of these oil trends, along with relative constraints on US federal spending due to divided government and more certainty about government revenue streams due to the settlement of long-standing income tax impermanencies.
