Research On Influential Factors Of International Gold Price

As a special bulk commodity, gold has multiple properties:commodity, currency and hedging. It is not only an important raw material for jewelry production and modern high-tech industry, but also an important tool for international payment and wealth storage, and not only a safe-haven during the financial crisis, but also a hedge against inflation.As one important hedging instrument, the global demand for gold has greatly increased, and gold price become higher and higher in succession since the global financial crisis started in2008. Furthermore, the United State and other countries implemented quantitative easing monetary policy in the beginning of2010, which caused continuous soaring of gold price from$500/oz to﹩1,900/oz. The economy of the United States and other countries started to recover whilst the Fed announced its withdrawal from quantitative easing policy in2013, and then gold price quickly fell to﹩1,200/oz, and a great fluctuation appeared again. Meanwhile, as Chinese dollar-based foreign-exchange reserve continued to grow and domestic CPI kept high, gold became a hot topic again. Therefore, the research on the influential factors of gold price has important theoretical and practical significance.Through reviewing previous literature and the historical trend of gold price since the collapse of the Breton Woods System in1973, this present thesis makes use of data, chart, correlation analysis and other methods to carry out theoretical and empirical analysis on the factors influencing gold price and judges the basic trend of gold price.The multiple properties of gold determine that the factors which influence gold price must be complicated. The present thesis firstly analyzes the relationship between supply and demand of gold and its price. According to classification of the World Gold Council, the gold supply is divided into mine supply, official sector sales and recycled gold. Through analyzing in detail, the present thesis shows that gold price has close connection with official sector sales and recycled gold; the price of gold is in negative correlation with official sector sales and in positive correlation with recycled gold, but it has no obvious correlation with mine supply. In terms of demand, the price of gold is in strongly positive correlation with investment demand and in negative correlation with jewelry demand, but it has no obvious correlation with industrial demand. Therefore, it is shown through analysis that the official sector sales and investment demand influence the short-term trend of gold price.Secondly, this thesis considers the currency and hedging properties of gold, carries out theoretical analysis on main factors influencing gold price, and takes the US dollar index, consumer price index, share index, interest rate and price of crude oil as proxy variable to carry out empirical analysis on the influence on gold price in the period from January1981to September2013. The result of the research shows that the factor influencing gold price is different in different period. The US dollar index, share index, and interest rate are inclined to drive price of gold in negative direction, among which the US dollar index has long-term stable negative driving function on the trend of gold price, the interest rate has stable influence on gold price under the condition that no great change happens in economic environment, but the share index has instable influence and it even rises or falls with gold price after financial crisis, with unobvious replacement. There is no long-term stable correlation between inflation and gold price, and the resistance function of gold against inflation is not as obvious as we image. Although the gold price and price of crude oil has convergent trend due to influence by US dollar and other factors, the price of crude oil has no direct influence on long-term trend of gold price; the occurrence of financial crisis causes rising of gold price; the turmoil of geopolitics also makes gold price become higher and higher; after the turbulent environment becomes smooth and steady, the price of gold will fall again.According to the research conclusion, this thesis gives a prediction on future trend of gold price, and provides suggestions for reference for government, investors and producers. Government should analyze the trend of gold price, gradually add gold reserve, improve the gold market, and encourage and guide folk collection of gold; the investors should seize the opportunity to properly add gold asset, but the gold asset shall not account for a large proportion in investment portfolio; the gold producers should improve the exploitation level to meet diversified gold consumption and investment demand so as to realize a continuous development.