Do Macroeconomic Factors Influence Gold Prices? A Study of Empirical Evidence across Global Markets

Description

Page: 272-278

Sarishma Sharma (School of Business Studies, Punjab Agricultural University, Ludhiana, Punjab)

During periods of financial and economic instability, a steep decline has been observed in the value of financial assets. Against the performance of traditional assets, gold has performed robustly even during the time of financial crisis. The performance of gold during the financial crisis has stimulated investors to consider gold in the investors’ portfolios. Gold is considered as a store of value, thereby it has been able to insulate investors’ wealth against the financial crisis. Its performance is relatively immune to inflation, financial crisis, economic uncertainties, and exchange rates. The volatility in the price of gold has impacted the macroeconomic essentials of the economy explicitly. This paper aspires to probe into the research on the influence of macroeconomic variables on the price of gold. This study accentuates the available literature on the impact of monetary policy announcements, oil prices, interest rates, COVID-19 pandemic, inflation, US exchange rate, global financial crisis and other macroeconomic factors on the price of gold across the developed and developing economies of the world. The empirical study exhibits the distinctive results obtained from studies conducted across different countries at different time periods. Monetary policy announcements, oil price shocks, interest rates, COVID-19 pandemic, inflation, US exchange rate, global financial crisis and other macroeconomic variables seems to significantly affect gold prices. The study concludes that investors’ can rely on gold as an investment alternative owing to the safe haven properties of gold.