Gold Fluctuation

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Table of Contents

Topic Approval Sheet i

Acknowledgement ii

Abstract iii

Chapter I 1

INTRODUCTION1

Background:1

Purpose/ Objective of the Study:1

Methodology:2

Scope of the Study:2

Limitation of the Study:3

Structure of the paper:3

Chapter II

CONCEPTUAL FRAMEWORK4

Chapter III

FACTORS INFLUENCING GOLD FUTURES6

US dollar and gold price……………………………………………………………………….6

Central bank reserve policy and gold price……………………………………………………8

Demand and supply of gold and its effects in the price………………………………………11

Inflation and gold price……………………………………………………………………….15

Investment demand and gold price…………………………………………………………...16

Geopolitical scenario, macroeconomic changes, and gold price……………………………..18

Gold vs. Oil as an investment alternative………………………………………………….…….19

Chapter IV

CONCLUSION21

References

Chapter I

INTRODUCTION

Background:

Gold has attracted investors throughout the centuries, protecting their wealth and providing a 'safe haven' in troubled or uncertain times. This appeal remains compelling for modern investors, although there are also a number of other reasons that underpin the widespread renewal of investor interest in gold. It provides insurance against extreme movements that often occur like war, economic crisis, changing monetary policies and so on. Individual or institutional investor tend to invest more in gold in order to diversify their portfolio by not only holding the US dollar as a reserve but also gold as well to hedge against the falling price of US dollar, to hedge against inflation, to provide higher liquidity at the time of urgency and to provide insurance and economic security against unexpected events like the recent economic crisis. There are certain factor that influences the price of gold from time and again. Some of these factors are US dollar currency, central bank policies, inflation, US economy, demand and supply of gold and other macro economic variables. Many Asian countries like India, Russia, Sri Lanka, and China are presently making a great initiative towards buying out more gold to protect their wealth and to hedge against the falling price of US dollar. Gold is regarded as one of the highly traded commodity in the commodity market. Recent economic crisis that has started from the US has led to some fluctuation on the gold price. This is because the weakening of the US dollar currency and strengthening of the gold price has led the international investor to focus more on investing on the gold rather than foreign currencies especially US dollar. So, there has been an increase in the commodity market for trading of gold and other commodity in international market. Likewise, the gold investor are also increasing in Nepal with some of the commodity market already started trading the gold and other commodities.

Purpose/ Objective of the Study:

The purpose of the study is to make in depth analysis of the factors that influence the gold future. Since, the change in the price of the gold has major influence on other commodities and currencies so it is very important to understand the gold and its relationship with various other factors like US dollar, inflation, demand and supply, central bank policies and other macro economic variables. This study is mainly conducted to know how the gold price fluctuates irrespective of the change in the dollar value, inflation, demand and supply and central bank policies around the world.

Methodology:

We base our study on the secondary source of information available in the market, articles, journal, and webpage and research paper. This study also comprises some of the opinion from the experts in the gold futures, which are included in the part of our analysis..

Scope of the Study:

Some of the major scopes of the study are listed below:

• This study is...
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