Analysis of the relationship of gold prices with inflation and bitcoin in the post-tapering period

Abstract

We analyze the hedging feature of gold against inflation by analyzing the factors affecting gold prices for the post-2013 period, including the tapering process in the United States. Our results show that especially demand for gold Exchange Traded Funds (ETFs) and US 10-year bond rates are effective on gold prices in this period. Inflation has no statistically significant effect on gold prices over the sample period; however, in the subperiod, excluding 2014–2019, inflation has a statistically significant positive impact on gold prices. We conclude that gold does provide a partial hedge against inflation as an investment tool, at least for the recent period. Furthermore, our analysis of Bitcoin's effect on gold prices starting in the second half of 2016 shows no statistically significant relationship.