Abstract
Research background: Commodities are attractive investment opportunities and are objects of many researches. Traditional and most stable seem to be precious metals gold and silver. In the global world where anyone can access information in seconds it is crucial to know the background of price development in order to make the right investment decision. Purpose of the article: This paper focuses on international commodity exchanges and analyzes factors affecting prices of selected commodities. It offers a summary of recent studies and continues with an analysis of most relevant factors affecting price of gold and silver. Methods: After collecting data and testing their consistency we construct two hypothesis models. Using linear regression model we test the appropriateness of models which are constructed for each commodity. Subsequently, we test statistical significance of individual explanatory variables, such as dollar exchange rate, VIX, CPI, DJIA, DAX or oil price. Additionally, we take into consideration not traditional factors e.g. Bitcoin. Findings & Value added: Finally an evaluation of results are carried out and the influence of variables are quantified. For instance, negative impact of VIX and dollar exchange rate in observed period of time was confirmed. Given the fact that there can be various other factors influencing price development of gold and silver this paper serves as basis for further analysis in this direction.
Highlights
Precious metals have been globally used as a means of exchange and store of value for millennia
In this paper we focused on factors potentially affecting gold and silver prices
Our study provides comparable results with previous studies in certain extent – we can confirm negative impact of Index USD on both studied precious metals gold an silver, but having weak impact on the latter
Summary
Precious metals have been globally used as a means of exchange and store of value for millennia. This paper investigates if and to what extent factors influence prices of two selected commodities. The aim of the paper is to develop appropriate econometric models for the selected commodities and to analyze the impact of various factors on their prices. We cannot deny significant events like 1996-1998, Dot-com crisis in 2001-2003, economic crisis in 2008-2010 or ongoing global COVID-19 pandemic. All of these events have a certain impact on the price of gold and silver, as they affect their supply and demand. There are significant events and other factors influencing prices of gold and silver. Besides usual factors mentioned below, we add Bitcoin as the most famous globally recognized cryptocurrency and we measure its influence on both precious metals. Besides usual factors mentioned below, we add Bitcoin as the most famous globally recognized cryptocurrency and we measure its influence on both precious metals. (Jones and Sackley, 2014)
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