The Theoretical And Empirical Research On The Factors Effecting The Gold Price

Since the collapse of the Bretton Woods System, governments loose control of the gold, and the gold price has been marketized gradually. However, except the general merchandise attribute, gold has the value storage function, which complicate the factors influencing the gold price, and the gold price fluctuate more violently. The related research results in and abroad indicate that the factors influencing the gold price aremainly given as followed, demand and supply of gold, macroeconomic factors(iricluding: inflation rate, interest rate, exchange rate) and other factors such as the central bank's gold reserve, the fluctuation of merchants'marketization geopolitics etc. this essay will firstly analyse theoretically the effect tunnel, effect degree from the gold's merchandise attribute and value reserve function, and then using the econometrics method to verify the results, and the same time test the real influencing factors degree in the certain circumstance.By studying of supply and demand of gold, there are the short-term aggregate supply function of gold:Qts=Qs(Pt,Qbt-1s,Rgt,Rgt-1,Cyt,pt,) Short-term aggregate demand function for gold:QtD=QD(Pt,Rt,βgt,βgt-1).So we get gold supply and demand in the short-term relationship andthe short-term equilibrium price of gold when suppose the aggregate demand function and aggregate supply function are linear function of the case.We study the the long-term equilibrium price of gold under the perfectly competitive market.We get the long-term equilibrium price of gold: Pt=MCat=MCbt,if the marginal cost of gold extraction rises at the general rate of inflation,then imply that as long as extraction costs rise at general rate of inflationπt=πEt,and the price of gold will rise at the general rate of inflation.By Empirical Analysis,there is a positive correlation between accumulated gold output,current and the price of gold.However,we proof that current yield on the impact of the price of gold is not very significant.We are mainly from inflation, interest rates and exchange rate to stdutying the Macro-economic factors on the impact of the price of gold.We study inflation from the Gold standard and Credit Monetary System.Under the Gold standard,the stock of gold held by the bank reacted with the expected rate of inflation.The equation of money supply and demand implies the price level condition: Under the Credit Monetary System investors adjusted the number of gold in the the portfolio base on expected of next period and last period.We use the data by January 1973 to March 2008 to do Empirical Analysis.This is the positive correlation between gold price and inflation.Gold is an effective tool for inflation hedge.However,in short term,the relationship between the gold and the price level will also be deviated.This may be due to there is not hyperinflation during the sample.The gold is relativeiy a store of value.We supposed that there are two kinds of investment instruments what are gold and government bonds in the market, The interest rate level is the opportunity cost of holding gold in the market. The difference between bond yields and gold yields will to disaapear when the market is effectively, We use the present a particular model of determination in a source market. There is the negative correlation between gold price and interest rate.There are difference between consumption gold and investment gold.Since the collapse of the Bretton Woods system,as an international the U.s. currency exists the problem of instable intrinsic value,gold continues to play its role of international reserves.This is evident between the two reveals the negative correlation between gold price and U.S.dollar.In recent years changes in the U.S.price of gold reflects the weakness of U.S.dollar.It promotes the power of gold.Samples shows that gold has a more significant fanction to hedge dollar Depreciation.In order to find the possibility of gold prices against stock prices.Followed by the Theoretical analysis to Empirical research, there is not significant long-term relationship between the gold prices and stock market,so gold is not against the stock market risk.