Does the Factors Affecting Gold Price Changed During Covid-19 Period in Malaysia?

Damien Lee Iung Yau,Josephine Yau Tan Hwang,Chiam Pei Ching,Sin Kit Yeng And Joanne Shaza Janang Janang,Kit Yeng Sin

doi:10.6007/ijarbss/v11-i9/10761

Damien Lee Iung Yau, Josephine Yau Tan Hwang + Show 3 more

Open Access

https://doi.org/10.6007/ijarbss/v11-i9/10761

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Abstract

This paper examines whether Covid-19 pandemic has changed the main economy factors affecting gold prices, and the relationship between KLCI and gold price in Malaysia. Gold plays an important role in an economy during normal and uncertain market situations. This research involved 62 monthly data covering the period of January 2016 to February 2021. Unit root and diagnostic tests are conducted on the data to ensure the results are valid. There are six macroeconomic variables involved, five of them are the independent variables and the remaining one is dependent variable. Multiple regression time series analysis is use to analyse the data in the perspectives of full sample, pre- Covid-19 period and during Covid-19 period. The results of this study found that few main economy factors ceased to be significant, and there is change relationship direction between exchange rate and gold price during Covid-19 period. We discovered KLCI has an inverse relationship with gold price. Future research can consider extending our analysis to neighbouring countries.

Highlights

Gold is a precious material and commodity plays an important role in an economy
KLCI data is collected from Yahoo Finance, exchange rate (USD/MYR) data is obtained from https://www.x-rates.com/ and consumer price index (CPI) is gathered from https://www.theglobaleconomy.com/
The study analyses the relationship between main economic factors and gold price in the context of full sample, pre- Covid-19 period and during Covid-19 period

Summary

Introduction

Gold is served as an important financial asset such as monetary, asset reserve and financial functions within an economy (Lubis, Alfarisi, & Adrianto, 2021). For the past 12 months, gold has played its traditional role as a hedging tool to manage uncertainties, by recording gold-back exchange traded funds (ETFs) of 877 tonnes worth USD48 billion (€40 billion) in 2020 (Gopaul, 2021). These reports have highlighted that gold has played essential roles as assets reserved and monetary functions as well as a hedging instruments in a troubled economy, during the time of Covid-19 pandemic

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