Gold Value Movement and Macroeconomics

Ananya Seemuang¹, Suppanunta Romprsert^2
(1. BNP Paribas Bangkok Branch; 2. Assumption University Hau Mark Campus Ramkumhang Rd. BKK 10240, Thailand)

Abstract: What will happen if American investors fail to manage their portfolios as a result of plunge in their assets’ value and global imbalance? Domino effects to the other industries and/ or to the rest of the world may occur as the US is the world largest economy. This research mainly aims to explore relationship on the movement of gold value and dynamic macroeconomic variables, specifically in the United States. There are five macroeconomic variables used in this research. Those comprise of inflation rate of the United States, US real GDP, value of US dollar, money supply level 2 of the United States (“US M2”) and real interest rate in the US. The findings find that the percentage change of US dollar index is the perfect factor to explain movement of gold fix. Value of gold goes well even value of money drops. Movement of gold value and percentage change of US dollar index have mirror effects to each other. In Thailand, buying and selling price of a unit gold fund is determined by mark-to-market at the end of each day trade. Thai investors, who are willing to invest in gold through gold fund, can decide to buy such fund when US dollar spot drops heavily. They can collect cheap gold for their investment by predetermination when dollar spot rate is weak.

Key words: gold value; dynamic; macroeconomics; investment; movement

JEL codes: E44, F62, G00