Impact Analysis Of The U.S.Dollar Money Supply And The Gold Price

The Wall Street financial crisis swept the world in2008. made the global economy into a recession. The crisis first affected the global financial markets, and various types of assets has shrunk dramatically, and then spread to the real economy, a large number of business failures, and the global economy fell into a deeper dilemma. The direct result of this crisis is the bursting of the credit bubble:people lose confidence in the credit currency gradually. At the same time, in response to the recession and the liquidity shortage, the governments set out to print money and increase financial expenditure, hoping these measures can make the economy rebounds. Affected by the crisis, people focus their attentions on the gold:and we can find that the gold price has been showing an upward trend since2008. even has reached a record high of S1.869.9per ounce.During the crisis, the economic decline, as well as the implementation of quantitative easing monetary policy and the huge budget deficit led to the sharp depreciation of the dollar, the status of the U.S. dollar as an international currency began s to shake. Due to the special properties of gold, people have focused its attention on the relationship between the significant increase in dollar supply and the gold price. Around this topic, we study the following three questions:first. whether it will affect the gold price. if the amount of U.S. money supply increases’? Second, how does it influence the gold price? Third, does it really exit the simple logic that the increase in money supply will lead to the gold price increase at the same time?Based on the results of previous studies, we analyze the channels and ways that affect the gold price, and then we use statistical method to analyze the correlation between the dollar and gold price in the long-term, medium-term and short term. Through the empirical test, we get the results that here is a positive correlation equilibrium relationship between the supply of dollars and the gold price in the long term:In the short to medium term, the dollar supply changes Granger cause fluctuations in gold price, but affected by the economic situation as well as other factors, especially the inflation. At last we get the conclusion and outlook the international gold market trends. We suggest that investors should maintain a rational investment, on the basis of comprehensive analysis of various factors.