Gold vs. Crude Oil: Growing Gap Signals Economic Concerns
Bloomberg Intelligence Senior Commodity Strategist Mike McGlone has pointed out a growing gap between gold and crude oil, signaling increasing worries about a possible global economic slowdown.
To this end, gold has jumped nearly 46% over the past year as investors seek safe assets amid rising geopolitical tensions and ongoing economic uncertainty.
In contrast, crude oil, often a measure of industrial activity and economic health, has seen minimal gains or losses across different benchmarks. This reflects signs of weak demand, as McGlone noted in an Xpost on June 18.
The ongoing military conflict in the Middle East between Israel and Iran has also complicated the situation. These tensions have pushed crude prices closer to late-2024 levels.
Although these geopolitical risks have briefly lifted oil prices, they may also increase supply, pushing prices down further and indicating a recession.
“Gold Up, Crude Oil Down — A Global Recession Path – Military escalation between Israel and Iran have lifted crude oil back to end-of-2024 levels, which may incentivize more supply and add fuel to recessionary leanings,” McGlone said.
According to Bloomberg, gold is up 45.9% over the past year and 28.9% year-to-date. In contrast, the WTI Crude Oil Subindex gained only 3% in the same year, with a slight 5.6% rise year-to-date.
Heating oil has fared slightly better, showing a 6.1% return over the last year and a 15.1% gain in 2025. However, other energy benchmarks, such as gasoline and natural gas, have shown weak gains or declines.
At the same time, Bloomberg’s broader energy subindex has been down 2% over the past year, remaining only slightly positive year-to-date. This trend indicates a wider cooling in energy demand.
Overall, this divergence signals a market shift toward safer assets. Gold reflects ongoing investor concerns around inflation, geopolitical tension, and economic instability, while the weak performance of energy markets points to softening global demand, a typical recession indicator.
Gold’s rally has extended into 2025, driven by its safe-haven appeal. The initial surge stemmed from recession fears tied to President Donald Trump’s trade tariffs, with recent gains fueled by rising concerns over a potential world war.
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