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Gold and Oil
The price of gold and the price of oil (“black gold”) tend to rise and fall together. But they are not bound to each other. A higher gold price doesn't necessarily lead to a higher oil price and vice versa. In fact, high oil prices actually put downward pressure on gold mining stocks because high energy prices make mining operations more expensive.
Over the the last 30 years an ounce of gold, on average, has bought 16 barrels of oil. But that ratio has swung from single digits up to 25 barrels to the ounce and stayed at the extremes for extended periods of time. Currently an ounce of gold will buy about 8 barrels of oil. While it is likely that the barrels per ounce ratio will return to the average, one can't say with any certainty whether gold will go up, oil come down, or both.
It has been said that the days of cheap oil are over. Oil production in the U.S. reached it's peak in the 70's and non-OPEC production peaked in the 90's. Even if it may be historically overvalued, oil prices could remain high for the foreseeable future. Only alternative energy sources or some unexpected discovery of new oil deposits is likely to bring the price of oil down to anywhere near it's pre-Iraq War levels.
In the past, sharp rises in the price of oil have unfailingly led to recession or stagflation and a plummeting in the price of stocks while a falling or evenly rising price of oil has led to a strong economy. High oil prices and a weak economy in themselves don't determine the price of gold, it is whether the weak economy leads holders of US dollars to be leery of inflation (which by definition means an increase in the supply of dollars). If inflation is suspected, then gold prices will rise as gold will be seen as having more stable value than dollars. (See Gold and Interest Rates.)
While there is no direct correlation between oil and gold, there is a direct, inverse correlation between the value of the dollar and gold. When the dollar goes down, gold goes up. The price of oil influences the gold price indirectly through oil's influence on the dollar. If the high price of oil leads to a weak economy and the fed responds by increasing the money supply, then gold will go up in value.
What happens if oil is no longer priced in dollars but is priced in euros or dinars or some such thing? Some have suggested that Saddam was deposed because in 2000 he insisted that oil no longer be sold in dollars but in euros. The shift itself would have little effect on the dollar as long as dollars were still being held as the world's reserve currency. Most financial transactions are electronic transfers anyway so it matters little what you call it. What does matter is whether the world's governments are willing to hold their reserves in dollars. Insofar as a shift away from pricing oil in dollars was a sign that foreign governments no longer believed in the value of the dollar as a reserve currency, then the price of gold in dollars would soar. Or, more accurately, the value of the dollar would plummet.
Markets do not like uncertainty. Trouble in the Middle East makes the price of oil rise for fear of disruptions in oil production and it makes the price of gold rise because gold is seen as a safe haven in times of trouble.
To reiterate, a rise in the price of oil doesn't make the price of gold go up. The price of gold does not drive the oil price. Rather, the price of gold is driven by inflation and by it's perceived value as a safe haven investment. High oil prices can lead to inflation and any threats to the oil supply lead to a search for a safe haven. As a corollary, low energy prices are a stimulus of economic growth and lessen the threat of inflation.