Dynamic Changes in Noble Metal during Period of Local Conflict: Evidence from Soaring Crude Oil Price

Abstract

The Russia-Ukraine conflict officially began on February 24, 2022, when Russia conducted a special military operation in Ukraine. Crude oil prices have soared since the start of the conflict and have had a significant impact on the noble metals industry. In this paper, gold and silver are selected as the representatives of precious metals, and the data of crude oil, gold, and silver from June 2021 to August 2022 are captured. The VAR model is used to draw the impulse response diagram to explore the impact of oil price increase on gold and silver prices, finding that the sharp rise in international crude oil prices caused by the conflict between Russia and Ukraine led to the rise in your financial market. Then, the ARMA-GARCH model is used to study how the prices of gold and silver are affected by the conflict between Russia and Ukraine, concluding that the increase of oil price does not increase the volatility of gold return, but it has a significant positive impact on the volatility of silver yield. And as the conflict between Russia and Ukraine continues, this effect will gradually weaken.