Research On The Influence Of U.S. Dollar Exchange Rate On Gold Price

During the financial crisis, the implementation of a large number of unconventionalquantitative easing monetary policies led to the global excess liquidity, serious inflation,and credit currency devaluation. In this case, investors around the world began to seekgood investment tools. Gold get the favor of people by the inherent safety protectionfunction, and suddenly, gold investment became very hot. During the outbreak of thecrisis, the international gold prices have even break through$2000an ounce. After thecrisis, however, as the world’s major economies economy gradually dip picks up,especially the U.S. economy continues to rebound, the U.S. dollar index is risinggradually, however, the international price of gold is unexpectedly encountered Waterloo.Although the investment enthusiasm of "China Aunts" is not reduced, the internationalgold prices begin to reduce all the way, since the beginning of2013’s$1664an ounce,until fell below the$1200mark. In less than one year, fell by30%. Slump in such atragic situation; make a lot of gold investors suffered huge losses.It is true that during the financial crisis, gold investment has played a very goodsafety effect, but last year’s big gold bear market is also a fact. At this time, theinternational gold price’s mechanism research is particularly important. The previousresearch suggests that the dollar is the most important factors affecting the price of gold,and there is a negative correlation relationship between them. But the data show thatsince September2008, the inverse relationship between the dollar and gold pricesdecreased significantly, sometimes even increase or decrease at the same time. Then,what are the mechanisms of the U.S. dollar exchange rate affect the price of gold? Whydeviation will appears between them after the financial crisis? What is the pricingmechanism of short term gold price? All of these problems are worth of furtherexamination.This article first has carried on the system analysis to the influence factors of theprice of gold, On this basis, using theoretical analysis and statistical description method,analyzed the influence of the dollar to gold prices. Then select appropriate variable indicators and sample interval, and set up ECM model and VAR model for the long-termand short-term data respectively. And using the unit root test, cointegration test, grangercausality test, impulse response function and variance decomposition analysis of timeseries analysis method carried on the empirical research. The results show that in the longterm the dollar exchange rate has significant negative effects on the price of gold. Afterthe financial crisis there will be short-term deviation between them. And the influencefactors of gold prices in the short term are more and more complex. Finally, according tothe results of gold investors put forward practical and effective investment advice.