RELATIONAL STUDY BETWEEN MACROECONOMIC VARIABLES AND GOLD PRICE: LATEST MALAYSIAN EVIDENCE

Abstract

Gold is one of the world-leading commodities, which is sought after as jewellery as well as an investment. Despite gold advantage as a reliable store of value, its price has been as fluctuating as other commodities or assets such as crude oil and stock. Therefore, investors should be aware that gold is not totally resistant to market turmoil and economic crisis. Gold could be as vulnerable as other traditional investment vehicles. Hence, this paper focuses on investigating the macroeconomic variables affecting gold prices in Malaysia using monthly data from 2014 to 2018. This study uses Pearson Correlation and Multiple Linear Regression tests to determine significant relationships and effects between the independent variables, namely interest rates, inflation rates, crude oil price, and exchange rates with the dependent variable, namely gold price. The findings show that the interest rate has a significant negative effect on gold price while inflation rate, crude oil price, and exchange rate have a significant positive effect on gold price in Malaysia, respectively. The results suggest valuable information and insight to policymakers, researchers, and investors in decision making.