Factors Influencing the Price of Gold in Malaysia

Abstract

Despite price increases, gold, a valuable and precious metal, has been used as real estate and financial assets. The price of gold keeps rising over the long term, but it is quite fluctuating and volatile over the short term. Investors will turn to gold as a backup investment during a financial crisis because gold may be used as a hedge against inflation. In addition, investors will swarm to the gold market as a hedge against uncertainty during an uncertain economic climate. Before, during, and after the financial crisis, it is unknown what variables in particular affected the price of gold. The main objective of this research is to assess the determinants that are influencing the price of gold in Malaysia. The secondary data is collected to measure the relationship and fluctuation of gold prices, the data collected is quarterly from 2005–2021. This paper uses descriptive statistical analysis for the description of data, coefficient matrix analysis and regression analysis for determining the impact of dependent and independent variables. In this research paper, gross domestic product (GDP), inflation rate (IR), interest rate (IR), unemployment rate (UR), and exchange rate (ER) are included in macroeconomic indicators and considered as independent variables. The gold price is considered a dependent variable.