The effect of gold and oil prices upon international stock market indexes

Investors have historically used simple risk adherent strategies in their portfolios such as diversifying across countries and including gold or oil investments because these two investments typically had an inverse relationship with stock market movements. Technology has changed the environment where there are very few obstacles to hinder investors to buy or sell assets anywhere in the world today. There are also many other options for investors to use for risk aversion so that gold or oil might be considered as merely another commodity. This study investigated the relationships between gold, oil, and various international stock indexes. The results show that there is a strong, positive association between the international stock indexes. There are also significant positive relationships between oil and stock prices, while gold's expected inverse relationship with stock prices has changed over time. The positive relationships suggest that some traditional portfolio risk techniques may no longer be valid.