Empirical Research On The Influence Factors And Short-Term Forecasting Of Gold Price

Since ancient times gold as a special commodity has been regarded as a symbol of wealth. Because of stable physical and chemical property as well as the scarcity and non-renewable, gold is the natural material for currency. At the same time, it is not only a kind of commodity but also a kind of currency. On the other hand, gold reserves the characteristics of the risk aversion and stable value, so it is a special kind of financial investment. The portfolio with gold and stock can effectively control the risk. Since the collapse of Bretton Woods system, the dollar and gold has been no longer linked. The gold standard was out of the international system. However, its monetary attribute still exists. Due to the dual properties of commodity and currency, gold’s price decision mechanism is more complex than general goods. Gold price volatility was very severe in recent years. Firstly rose and then fell. In 2012 its price climbed to $1668 an ounce, but at the end of 2013 jumped to $1205 an ounce, dropping by 28.61%, then at the end of 2014 closed at $1205 an ounce. Gold as a kind of precious commodity has been used for reserve, investment and resisting the inflation. Because of the complexity of the influencing factors, investors face the risk of the fluctuations in the gold price. So it is necessary to research the gold market’s price trend and influence factors.This article first analyses a series of factors which affect the price of gold using qualitative method. Supply and demand is the fundamental reason affecting the gold price’s fluctuation. The dollar, oil price, inflation, political situation and stock market all have an impact on gold price. Then use quantitative method to establish econometric model and conclude that in the sample interval variables affecting the price of gold in China are the CPI and the dollar. There exists a long-term stable relationship between spot gold price in China and the dollar, the CPI. Gold price changes in same direction to the CPI, but in the opposite direction to the dollar. Causality test shows that the gold price is the granger cause of the CPI and the dollar exchange rate is the granger reason of the price of gold. Only has a one-way causal relationship between them. Error correction model shows that the short-term impact is less than the long-term impact. Finally using GM(1,1) forecasts the gold price in China. Based on the analysis results above, this article puts forward some suggestions for the government and investors. They are increasing gold official reserves and learning investment experience to do rational speculation.