Journal of Commerce and Accounting Research

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Do the Macroeconomic Factors Influence the Volatility of Gold Price?: An Empirical Study


Affiliations
1 Assistant Professor, School of Business and Management, CHRIST (Deemed to be University), Bengaluru, Karnataka, India
2 Associate Professor, School of Commerce and Management Studies, Dayananda Sagar University, Bengaluru, Karnataka, India
     

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The price of gold changes every day due to several reasons, such as economic factors, political factors, festival season, and the demand and supply needs of the consumers across the world. Among these factors, the change in gold price is majorly influenced by macroeconomic variables in India. With this backdrop, the study focuses on the influence of macroeconomic factors on the fluctuations in gold price in India. The study has chosen select macroeconomic variables on the basis of existing studies, namely wholesale price index (WPI), exchange rate (ER), unemployment rate (UR), long-term interest rate (LTIR), and S&P BSE SENSEX. This study takes monthly observations over a period of five years, from 1 January 2015 to 31 December 2019. Descriptive statistics is used to check accuracy and reliability of the data. Correlation analysis is used to find the relationship, and ordinary least square (OLS) method is applied to check the cause and effect of the macroeconomic variables on the gold price. The study empirically found that ER, WPI, UR, and S&P BSE SENSEX have a positive influence on the gold price, while LTIR has a negative influence.

Keywords

Gold Price, Exchange Rate, Wholesale Price Index, Long-Term Interest Rate, Unemployment Rate, S&P BSE SENSEX
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  • Do the Macroeconomic Factors Influence the Volatility of Gold Price?: An Empirical Study

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Authors

Sathish Pachiyappan
Assistant Professor, School of Business and Management, CHRIST (Deemed to be University), Bengaluru, Karnataka, India
G. Chandrakala
Associate Professor, School of Commerce and Management Studies, Dayananda Sagar University, Bengaluru, Karnataka, India

Abstract


The price of gold changes every day due to several reasons, such as economic factors, political factors, festival season, and the demand and supply needs of the consumers across the world. Among these factors, the change in gold price is majorly influenced by macroeconomic variables in India. With this backdrop, the study focuses on the influence of macroeconomic factors on the fluctuations in gold price in India. The study has chosen select macroeconomic variables on the basis of existing studies, namely wholesale price index (WPI), exchange rate (ER), unemployment rate (UR), long-term interest rate (LTIR), and S&P BSE SENSEX. This study takes monthly observations over a period of five years, from 1 January 2015 to 31 December 2019. Descriptive statistics is used to check accuracy and reliability of the data. Correlation analysis is used to find the relationship, and ordinary least square (OLS) method is applied to check the cause and effect of the macroeconomic variables on the gold price. The study empirically found that ER, WPI, UR, and S&P BSE SENSEX have a positive influence on the gold price, while LTIR has a negative influence.

Keywords


Gold Price, Exchange Rate, Wholesale Price Index, Long-Term Interest Rate, Unemployment Rate, S&P BSE SENSEX

References