Global Gold Market Research Articles

Price processes in the global gold market

Recurring global crises, increasing uncertainty in the world economy, rising geopolitical risk and recently geoeconomic fragmentation have renewed and intensified interest in gold in the 21st century. The precious metal still retains an important role in the economy, most notably as a long-term store of value and efficient portfolio diversifier. One of the most remarkable changes on the global gold market refers to the role of central banks. Over several decades after the breakup of the Bretton Woods system, central banks were selling gold held in their reserves. However, following the global financial crisis central banks ceased to be a source of gold supply and became a significant component of global demand for gold. We demonstrate that gold remains valuable and expensive in terms of both currencies and other commodities. Moreover, its record prices are a result of rising geopolitical tensions and uncertainty as well as the resurrection of inflationary pressures. We argue that gold prices are also overwhelmingly influenced by the monetary policy of the Federal Reserve and the US dollar exchange rate. On the other hand, the rapid increase in the price of gold reflects rising income and private demand for gold in emerging market economies, particularly in China and India. The purpose of the article is to assess the value of gold using a wide range of metrics as well as to present the determinants of gold prices, with special attention given to demand and supply fundamentals and financial instruments based on gold. The research methods used include statistical-descriptive analysis, comparative analysis and literature study.

THE IMPACT OF THE COVID-19 PANDEMIC AND THE RUSSIAN INVASION OF UKRAINE ON GOLD MARKETS

Purpose – The study examines global Gold market performance and correlations between COVID-19, the Russian invasion, inflation, investors’ fear, asymmetric shocks, and the VIX (volatility index) impact on volatility. Research Methodology – This research uses an econometric approach to analyse the impact of COVID-19 and the Russian invasion on Gold market performance – specifically the ARCH (Autoregressive Conditional Heteroskedasticity) – GARCH (Generalized Autoregressive Conditional Heteroskedasticity) Model and the Threshold-Asymmetric ARCH Model. Findings – The study reveals that the COVID-19 pandemic and the Russian invasion of Ukraine have significantly impacted Gold market dynamics. Inflation significantly impacts volatility, emphasising the need for monitoring inflation rates. Investor fear increases demand during uncertainty periods, while negative shocks have a higher asymmetric effect. The VIX positively affects Gold market volatility, suggesting a perceived safe-haven status during increased volatility. Research Limitations – Gaps in the data related to COVID-19 cases, geopolitical events, and Gold market performance could potentially introduce inaccuracies, biases or limitations to the analysis. Practical Implications – The study’s findings have practical implications for investors, analysts, and policymakers involved in the financial investment of Gold markets. Originality/Value – This study provides new insights into the relationships between inflation, investor fear, asymmetric shocks, and the impact of the VIX on Gold market dynamics during economic and geopolitical uncertainty.

An analysis of the foremost issues with artisanal and small-scale gold mining from Ghana's perspective.

Ghana has abundant mineral reserves in many of its regions, and gold mining remains one of the country's main sources of revenue. Given Ghana's current position in the global gold market, this review provides insight into the ASGM sector to give an understanding of the pertinent issues in the sector and its role in the socio-economic development of the country. This review assesses the effects of ASGM operations in economic, social, health, and environmental contexts to raise awareness of issues related to ASGM. It evaluates the measures taken to lessen the consequences of ASGM and maintain the sector's long-term viability. This review considers the foremost issues, including continued Hg use in ASGM, recent use of cyanide in ASGM, pollution of water bodies, and toxic metal contamination. It takes into account sustainable measures and remedial techniques that Ghana has implemented to alleviate the negative effects and support best mining practices. The primary factors influencing people to participate in ASGM are the need for quick sources of income, the scarcity of jobs in rural areas, the economic hardship, the need to supplement earnings from other activities like trading, and the comparatively meager profits from agricultural activities. Findings indicated that to gain more traction in addressing the challenges in the ASGM sector, the involvement of the community and direct stakeholders is essential to promoting responsible mining and environmentally sustainable practices. This review will increase awareness and pressure on decision-makers, researchers, and ASGM communities about the relevance of environmental conservation and sustainability.

Jewellery Business in India: Opportunities & Challenges

This text provides a comprehensive overview of the global gold market, with a particular focus on India and its bustling city of Mumbai. Gold, a precious metal, holds multifaceted significance worldwide, from jewelry to investments. The global gold reserves, distribution, and usage are analyzed, highlighting its dominance in the jewelry industry. India, known as the "Golden Bird," plays a pivotal role in the global consumption of gold, and its gem and jewelry industry is a significant contributor to the nation's economy. The text delves into India's consumption patterns, gem and jewelry exports, and the impact of government policies, including import tax fluctuations. Festivals like Diwali significantly influence gold demand. Mumbai, India's financial capital, stands out as a major consumer of gold, with the historic Zaveri Bazar being a hub for jewelry enthusiasts and artisans. The Gem & Jewellery Export Promotion Council (GJEPC) hosts the prestigious "India International Jewellery Show" in Mumbai, attracting international attention. Government initiatives, including hallmarking requirements and changes in GST rates, aim to regulate and standardize the gold jewelry industry. The text also discusses the establishment of a gem and jewelry park in Navi Mumbai, promising significant investments.

Hybrid neural network-based metaheuristics for prediction of financial markets: a case study on global gold market

Abstract Technical analysis indicators are popular tools in financial markets. These tools help investors to identify buy and sell signals with relatively large errors. The main goal of this study is to develop new practical methods to identify fake signals obtained from technical analysis indicators in the precious metals market. In this paper, we analyze these indicators in different ways based on the recorded signals for 10 months. The main novelty of this research is to propose hybrid neural network-based metaheuristic algorithms for analyzing them accurately while increasing the performance of the signals obtained from technical analysis indicators. We combine a convolutional neural network and a bidirectional gated recurrent unit whose hyperparameters are optimized using the firefly metaheuristic algorithm. To determine and select the most influential variables on the target variable, we use another successful recently developed metaheuristic, namely, the moth-flame optimization algorithm. Finally, we compare the performance of the proposed models with other state-of-the-art single and hybrid deep learning and machine learning methods from the literature. Finally, the main finding is that the proposed neural network-based metaheuristics can be useful as a decision support tool for investors to address and control the enormous uncertainties in the financial and precious metals markets.

Dynamic Changes in Noble Metal Prices under Long-term Uncertain Situation: Evidence from Normalized Covid-19 Pandemic

Covid-19 has severely hit global financial market since its outbreak. Investors who withdrawal funds in other areas will seek protection under the precious metals, a market known for its safety. This paper assesses the global and China regional daily new confirmed cases’ impacts on gold and silver price. A VAR and an ARMA-GARCH model are built to analyze the changes of the value and volatility. The paper finds that Chinese epidemic still has a positive impact on international precious metal market price while the effects other continents are little. As for volatility, the shock brought by the virus has no significant influence on gold and silver volatility. The paper aims to study how precious metal investors response to newly confirmed cases under normalized Covid-19 Pandemic. Based on the results, global gold and silver market overreacts to the cases in China in comparison with other lands; Thus, the research suggests Chinese Government to further stabilize local pandemics while investors decrease the reaction towards China side’s epidemic.

The volatility of natural resource prices and its impact on the economic growth for natural resource-dependent economies: A comparison of oil and gold dependent economies

The 21st century brought many changes to the world. From witnessing a technological boom and awareness about the environment to renewable energy and conscious use of natural resources, the current century had offered a lot in the previous two decades. However, the question of natural resources being a curse or a blessing to the natural resource-producing economies is still unanswered and gathers many scholars' attention. The current study investigates the volatility of natural resources, oil and gold, and studies the impact of volatility in natural resource prices for resource-producing economies. The global market for crude oil has experienced significant downturns during the last two decades, the financial crisis of 2008 and the Covid 19 crisis of 2020, for instance. Compared to that, the global gold market has experienced relatively less impactful downturns during the same period. We explore how the volatility in oil and gold prices impact the growth of the resource-producing economies. The study is conducted on the top oil-producing countries and the top gold-producing countries on data from 2000 to 2020. The study finds that in the long run, the volatility in both oil and gold markets could be detrimental to the economic growth as measured by the GDP for the resource-producing economies. Our research also shows that the impact of the volatility in prices on the growth of economies is not consistent for all resource-producing economies in the short-term using PMG/ARDL methodology.

SEMI-STRONG FORM EFFICIENCY OF GOLD MARKET: COLLECTIVE RATIONALISATION AND ISLAMIC CALENDAR ANOMALY

Purpose: The current study aimed to test the impact of two religious months on the return behaviour of the gold market in Pakistan under informational efficiency hypothesis i.e. to empirically test the semi-strong form of EMH in gold market for religious calendar anomaly.
 Methodology: Weekly gold prices in rupees per one gram that prevailed in Pakistan for the period January 2007 till December 2015 were selected, summing up to 468 observations. Data was taken from World Gold Council and the Bullion-rate database. Event methodology was employed for capturing and analyzing the pre and post event reactions by calculating abnormal returns. Furthermore, average security return variability was employed for robustness check. 
 Main Findings: Opposing results were achieved for both the lunar calendar occurrences where the gold market is inefficient for the month of Ramazan but is found efficient in Muharram's case concluding into mixed evidence and findings.
 Implications/Applications: The contribution of this study differs from previous gold studies in two aspects; first the research investigated the effect of Ramazan and Muharram as Islamic calendar events, and second is that gold market prices of Pakistan that had not been examined earlier. So this study is adding to the literature in the sense of examining the new relationship in Pakistan.
 Novelty/Originality of this study: Extensive literature can be found about the global gold market that tested the weak form efficiency, but empirical evidence related to the semi-strong form efficiency of the gold market in Pakistan is not available neither the calendar anomaly related to the gold market is available. The dynamics of this very highly valuable and volatile asset market require investigation of such type.

Analyzing the global gold market and its development trends

Analyzing the global gold market and its development trends

Dynamic causality between the U.S. stock market, the Chinese stock market and the global gold market: implications for individual investors’ diversification strategies

ABSTRACTThis paper proposes a generalization of the prior VAR and EGARCH model to explore the linkage between returns and volatility transmissions in the U.S. stock market, the Chinese stock market, and the global gold market from 10 July 1996 to 20 July 2018. We found that past returns of the U.S. stock market can predict the current returns of the other two markets, and that significant reciprocal volatility transmission existed within and across all three markets. We further implemented average out-of-sample (OOS) forecasting to show that a risk-adjusted portfolio, such as mean-variance with sample estimator, does not outperform an equal-weighted portfolio. This provides insights for individual investors and helps to explain the ongoing disagreement in the portfolio literature concerning the effectiveness of risk-adjusted portfolios and equal-weighted portfolios when the number of assets is small.

Dependence between the global gold market and emerging stock markets (E7+1): Evidence from Granger causality using quantile and quantile‐on‐quantile regression methods

AbstractThis study examined the dependence between gold and stocks during 2002–18 in seven emerging countries. The study combined the bivariate cross‐quantilogram introduced recently with quantile‐on‐quantile regression (QQR) approaches to conduct comprehensive and complementary analyses. The QQR results for the full sample revealed a weak positive dependence in all the quantiles of gold and stock returns across all the countries selected during mild market conditions. The results for pre and post‐crisis periods largely were consistent with those obtained for the full sample, except for Turkey (pre‐crisis), and China and Indonesia (post‐crisis). The results of the causality test‐in‐mean (return) and that of the causality test‐in‐variance revealed no causal relation between stock and gold in the pre‐crisis period, while causality ran only from gold to some stocks in the post‐crisis period. Further, while there was volatility causality running only from gold to stocks during the pre‐crisis period, the volatility causality between the two markets was very high during the post‐crisis period. Therefore, we suggest that gold may have been a hedge for stocks during the pre‐crisis compared to the post‐crisis period. Further, international risk factors should be considered in optimal investment decisions between domestic and global markets' assets (stocks and gold).

The Influence of CME Futures Market on KRX Gold Market

KRX (Korea Exchange) gold market opened in March 2014 according to the government policy legalizing financial transactions, and traded one-gram unit of the real gold by Korean currency (KRW) in the exchange market. Despite the fact that KRX gold market showed the high efficiency in terms of tax and fee in contrast to the existing gold market, the studies on KRX gold market were scarcely performed until quite recently. This study introduce KRX gold market and shows the price discovery function of KRX gold market. Empirical analyses and the results were as follows. First, the return rate of CME gold futures at the t-1 day had a positive impact of significance on market rate of return of KRX gold market at the t day. Second, the KRX gold market also has price discovery function in global gold market. We analyze the efficiency of the KRX gold market by comparing the dollar spot price of gold in the KRX gold market and the price of CME gold futures. These results support the proper efficiency of the KRX gold market in terms of price discovery.

The intrinsic value of gold: An exchange rate-free price index

In this paper, we propose a gold price index that enables market participants to separate the change in the ‘intrinsic’ value of gold from changes in global exchange rates. The index is a geometrically weighted average of the price of gold denominated in different currencies, with weights that are proportional to the market power of each country in the global gold market. Market power is defined as the impact that a change in a country’s exchange rate has on the price of gold expressed in other currencies. We use principal components analysis to reduce the set of global exchange rates to four currency ‘blocs’ representing the U.S. dollar, the euro, the commodity currencies and the Asian currencies, respectively. We estimate the weight of each currency bloc in the index in an error correction framework using a broad set of variables to control for the unobserved intrinsic value. We show that the resulting index is less volatile than the USD price of gold and, in contrast with the USD price of gold, has a strong negative relationship with global equities and a strong positive relationship with the VIX index, both of which underline the role of gold as a safe haven asset.

The Intrinsic Value of Gold: An Exchange Rate-Free Price Index

In this paper, we propose a gold price index that enables market participants to separate the change in the ‘intrinsic’ value of gold from changes in global exchange rates. The index is a geometrically weighted average of the price of gold denominated in different currencies, with weights that are proportional to the market power of each country in the global gold market, where market power is defined as the impact that a change in a country’s exchange rate has on the price of gold expressed in other currencies. We use principal components analysis to reduce the set of global exchange rates to four currency ‘blocs’ representing the U.S. dollar, the euro, the commodity currencies and the Asian currencies. We estimate the weight of each currency bloc in the index in an error correction framework using a broad set of variables to control for the unobserved intrinsic value. We show that the resulting index is less volatile than the USD price of gold and, in contrast with the USD price of gold, has a strong negative relationship with global equities and a strong positive relationship with the VIX index, both of which underline the role of gold as a safe haven asset.

Long-range dependence in returns and volatility of global gold market amid financial crises

Using sampled historical daily gold market data from 07-03-1985 to 06-01-2015, and building on a related work by Bentes (2016), this paper examines the presence of long-range dependence (LRD) in the world’s gold market returns and volatility, accounting for structural breaks. The sampled gold market data was divided into subsamples based on four global crises: the September 1992 collapse of the European Exchange Rate Mechanism (ERM), the Asian financial crisis of mid-1997, the Subprime meltdown of 2007, and the recent European sovereign debt crisis, which hit the world’s market with varying effects. LRD test was carried-out on the full-sample and subsample periods using three semiparametric methods—before and after adjusting for structural breaks. The results show insignificant evidence of LRD in gold returns. However, very diminutive evidence is found for periods characterized by financial/economic shocks, with no significant detections for post-shock periods. Collectively, this is indicative that the gold market is less speculative, and hence could be somehow less risky for hedging and portfolio diversification.

Gold Investment Risk Analysis Model Based on Time Series

With the growing size of the gold market, all kinds of gold investment varieties are constantly emerging, namely, meet the residents needs and requirements of the investment risk, also makes the prime financial rise. This paper analyzes quantify the risk of gold market fundamentals, and has a deep research on the historical development of the global gold market, global gold market developing trends and factors affecting the gold price. This paper focuses on analysis of VAR risk management theory and VAR-GARCH model. VAR-GARCH model can be more effective on the VAR value forecast, which is a better way to estimate the gold market risk. In addition, VAR-GARCH conditional variance model is also analyzed, and high-risk the real market is the corresponding.

Dynamic price integration in the global gold market

This paper examines the inter-relationships among gold prices in five global gold markets, namely London, New York, Japan, Hong Kong (since 1 July 1997, a Special Administrative Region (SAR) of China), and Taiwan. We investigate the linkages between Taiwan and the other global gold markets to provide insights for useful investment strategies. The augmenting level-VAR models proposed by Toda and Yamamoto (1995) show that the empirical results find bi-directional causality between the London and New York gold markets, and uni-directional causality from New York to the other markets. In this sense, the New York market has gained a leading role in affecting global gold markets. This empirical finding serves as a predictor for the gold price in global markets.

Gold Price Modeling Using System Dynamics

The global gold market has recently attracted a lot of attention and the price of gold is relatively higher than its historical trend. This paper constitutes the first exercise of system dynamics applied to gold price in monthly frequency from January 2010 to June 2011. Rather than static forecasting characteristics found in another quantitative method, time-series, system dynamics allows possibility for prediction based on capturing causal interactions and consequently the feedback loops usually found in a complex system behaviour such as the gold price system. Therefore, it was expected that moving toward forecasting method utilizing system dynamics model could result in better prediction of the gold price. Our paper supports such hypothesis. Having ability to take into account of qualitative factors particularly political chaos and economic crisis events, the model developed in this paper reduces the prediction error, mean absolute percent error (MAPE), to merely 2% compared to approximately 9% error found with Holt-Winter Exponential Smoothing and 11% error using Box-Jenkins Method.

Mercury-free, small-scale artisanal gold mining in Mozambique: utilization of magnets to isolate gold at clean tech mine

Abstract Artisanal and small-scale gold mining accounts for a significant portion of the current global gold market. Many artisanal gold miners use mercury to amalgamate gold and separate it from undesired gangue minerals, because it is relatively inexpensive and readily available. Unfortunately, the inappropriate handling and use of mercury has created environmental and health concerns in artisanal mining camps throughout the world. While the vast majority of artisanal and small-scale gold mines in Mozambique use mercury amalgamation in the gold mining process, the privately owned Clean Tech Mine in the Manica Province has eliminated the use of mercury at their mine. Instead, gold is isolated by centrifugation and magnetic removal of gangue materials. Furthermore, the operation of this mine stands in contrast to other mines in the area due to the responsible business practices initiated by its owner to ensure worker safety. This report details the mining practices employed by Clean Tech Mine to eliminate mercury use throughout the mining process, increase worker safety, and provide the surrounding communities with an opportunity for sustainable employment.

An overview of global gold market and gold price forecasting

The global gold market has recently attracted a lot of attention and the price of gold is relatively higher than its historical trend. For mining companies to mitigate risk and uncertainty in gold price fluctuations, make hedging, future investment and evaluation decisions, depend on forecasting future price trends. The first section of this paper reviews the world gold market and the historical trend of gold prices from January 1968 to December 2008. This is followed by an investigation into the relationship between gold price and other key influencing variables, such as oil price and global inflation over the last 40 years. The second section applies a modified econometric version of the long-term trend reverting jump and dip diffusion model for forecasting natural-resource commodity prices. This method addresses the deficiencies of previous models, such as jumps and dips as parameters and unit root test for long-term trends. The model proposes that historical data of mineral commodities have three terms to demonstrate fluctuation of prices: a long-term trend reversion component, a diffusion component and a jump or dip component. The model calculates each term individually to estimate future prices of mineral commodities. The study validates the model and estimates the gold price for the next 10 years, based on monthly historical data of nominal gold price.