The macro connection between WTI crude oil and Gold is stagflation risk.
Higher oil prices via supply side shock (closure of the Strait of Hormuz leads to a lesser oil supply globally, in turn, also creating a second-order effect of lower aggregate demand as input costs of finalized goods and services get more expensive).
Hence, stagflation is a deadly combination of higher prices and lower economic growth prospects in later stages. A challenging environment for central bankers as they cannot easily implement expansionary monetary policies to counter and anticipate the second-order demand destruction in a stagflation environment.
Therefore, central banks are likely to adopt a “wait and see” approach, and some “inflation-fighting” central banks may turn cautiously hawkish and start to implement an interest rate hike cycle.
Gold, being a non-interest income-bearing asset, will incur higher opportunity costs as interest rates rise globally, in turn, triggering a negative feedback loop into the price actions of Gold.
Since 17 February 2026, the movement of WTI crude oil futures has an indirect correlation with Gold (XAU/USD), and its 20-day rolling correlation coefficient stands at -0.5 at this time of writing (see Fig.1).
The recent pull-back in the West Texas Oil CFD (a proxy of the WTI crude oil futures) due to “TACO jaw bowing” has managed to find support at its rising 20-day moving average.
West Texas Oil CFD’s medium-term uptrend phase remains intact, a clearance above $93.70 key near-term resistance may see a further push up to retest the $102.25 intermediate range resistance in the first step (see Fig. 2).
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