Research Essay

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Ghosh, Levin, Macmillan and Wright (2000) attempted to reconcile an apparent contradiction between short-run and long-run movements in the price of gold. They used monthly gold price data January 1976 to December 1999 and applied Error Correction Model. If set of conditions have satisfied, the price of gold will rise over time at the general rate of inflation.

Ranson (2005) tried to find out role of gold and oil as predictor of inflation. He found that gold price is more reliable barometer of the inflation than oil price because the effect on official inflation statistics, is reliably indicated by how far policy actions have allowed the price of gold to rise.

Worthington and Pahlavani (2006) tested for the
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The study confirms that the though few macro economic variables have a statistically significant impact on gold prices, the exchange rate of domestic currency to US dollar is the main and important factor which has a strong impact on gold prices.

Sjaastad (2008) used the technique of forecasting error data to study the relationship between price of gold and exchange rate of major currencies. The study was both empirical and theoretical in nature. It concluded that after the cessation of the Bretton Woods system, the evolution of floating exchange rates for various currencies has been a strong reason behind instability in gold prices. The most influential currency in this respect has been US Dollar. The appreciation or depreciation of US Dollar has been a very important factor in determining the gold prices.
Wozniak (2008) analyzed whether gold is volatile against equity and other commodities for the period 1974 to 2008. He concluded that during last 20 years gold has proven to be consistently less volatile than other assets, but in last few years’ volatility in gold price increased. Artigas (2010) studied the relationship between movements in the price of gold and inflation (money supply), for US, Europe, UK, India and Turkey tend to correlate to an increment in the price of gold by 0.9%, 0.5%, 0.7%, and 0.05%, respectively.

Alptekin, Guvenek and Boyacioglu (2010) investigated volatility of gold

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