Does global supply chain pressure motivate the gold market?

Abstract

Analyzing the gold market through a new perspective is crucial to forming a rational investment arrangement. This investigation utilizes the bootstrap full- and sub-sample techniques to probe the correlation between global supply chain pressure (GSCP) and the gold price (GP), further evidence of whether global supply chain pressure could motivate the gold market. The conclusions suggest that GSCP has positive and negative effects on GP. The positive influences indicate that intensifying GSCP might raise the safe-haven demand for gold to avert potential risks and uncertainties, underlining that global supply chain pressure could motivate the gold market, whereas low GSCP may decrease this incentive. However, the negative effect could not support the above opinion, which points out that the appreciation of U.S. dollars might weaken the hedging ability of gold. Conversely, GP negatively impacts GSCP, meaning that the gold bull market may stabilize the global supply chain, especially during economic crises. Against the aggravated Russia-Ukraine war and the severe global supply chain crisis, practical implications for consumers, investors, enterprises, and related economies could be put forward according to the above conclusions.

Keywords:

• Gold market
• global supply chain pressure
• causal relation
• time-varying

JEL:

• F41
• G12
• C32

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 To identify the stability, we also employ widths of 20-, 28-, 32-months to analyze, finding that their conclusions are coincident with 24-months.

2 The data is taken from the China Gold Association (CGA).

Additional information

Funding

This work was supported by the National Office for Philosophy and Social Sciences.