Big hit on gold price as oil slumps and dollar strengthens

What a difference a few days makes. A little over a week ago the oil price was strengthening by the minute dragging gold upwards with it as the dollar was seen to plough. Platinum too was in demand with predicted shortages keeping the price near record levels. Now the oil price has slumped losing over $20 a barrel from its peaks, gold has moved down in sympathy, although not as much in percentage terms, the dollar has strengthened in its reverse correlation, while platinum and palladium have dived too amidst tales of car manufacturing output being cut back in line with continuing doubts on the global economy.
Of all the above the fall in oil price surely was the most predictable? The only question was when would the bubble burst as there really was no shortage of oil output, U.S. consumption was seen to be falling and the Saudis were pumping more product. Mineweb called this well in a prior article in mid-June -" Is gold too low compared with oil - or is it that oil is just too high?" - admittedly a few days before oil peaked, but to us it was apparent that the oil price was unsustainable at these levels despite other experts predicting $150 or even $200 oil this year. Commodity prices can be a little unpredictable though and the situation could change should there be a major interruption to supply, in the Middle East or elsewhere, as oil is very much a commodity and thus subject almost wholly to supply/demand balances - and assumptions of this by speculators.
How much of the fall in gold and in pgms and the rise in the dollar is just a knee-jerk reaction to the oil price dive is anybody's guess. Our view is very much that oil and gold will decouple, and probably find their way back to a more historic price balance ratio between the two of 10:1. This could mean, in the short to medium term, say $90 oil and $900 gold or $100 oil and $1000 gold longer term.
As for the dollar, the US economic situation is unchanged and the currency has to continue to be seen as weak on the world stage. Once that reality is understood again by the markets, gold should revive a little as the gold price remains the ultimate indicator of the strength or otherwise of the dollar.
As for pgms, the dive here may also have been overdone. Even with automobile manufacturing cuts, if they take place, it is likely platinum production in particular will remain in deficit keeping prices relatively strong. Palladium may be a different story though as here there is a production surplus, assuming Russia continues its current sales pattern without interruption and prices could correspondingly remain relatively weak for the foreseeable future.
Meanwhile reports that billionaire investor George Soros went short on oil and long on gold suggests that Mineweb's views on the matter are not unique.