DOI: https://doi.org/10.21847/1728-9343.2014.6(132).36001

Analysis of globalization impact on the price of gold

Lyubov Doskochynska

Abstract


Modern society is developing under the condition of globalization processes. Geographical boundaries are no longer able to restrict financial transactions and agreements between states. Due to the process of financial globalization, role of gold in the world economy has experienced significant transformations. During the period of bimetallism and monometallism this metal served as money, and after the process of demonetization for the gold was officially assigned the status of precious commodity.

But, despite the demonetization of gold de jure, demand for this precious metal is significant not only in the industry but also in the investing activities. As a result, study of the impact of macroeconomic indicators on the gold price volatility remains important today.

With the purpose of a more detailed analysis of factors influencing the growth of gold price, world economic indices have been used during the research, namely: index of economic globalization, index of political globalization, GDP increase according to purchasing power parity (PPP), investments share in GDP and gold reserves.

Result of the research shows that with further globalization of economic and political sphere, as well as with increase in world GDP (PPP) can be observed slowdown in growth of both nominal and real price of gold. However, the increase of the share of investment in world GDP will contribute to the intensive growth of the real price of gold. Also our study has showed that despite the fact that gold and silver belong to the group of the precious metals, the influence of various external factors on them differs.

Keywords


nominal price of gold; real price of gold; nominal price of silver; real price of silver; economic globalization; political globalization

References


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