Will Gold Always Shine amid World Uncertainty?

ABSTRACT

This article investigates whether gold will always shine amid world uncertainty or not. The quantile on quantile (QQ) approach is employed to detect the mutual relationship between the world uncertainty index (WUI) and gold price (GP). We find the impacts of WUI on GP, in different quantiles, varies and runs in cycles. The positive influence that ripples from WUI toward GP indicates that gold will shine over economic or political chaos periods. However, this viewpoint cannot be recognized when considering the negative impacts of the WUI on GP. Also, by evaluating the compound influence from GP to WUI, we suggest that the gold market acts as a barometer of global risk according to the market states.

KEYWORDS:

• Gold price
• world uncertainty
• quantile-on-quantile
• risk prevention

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1. Gold price in U.S. dollars can be obtained from the World Gold Council.

2. It includes 143 countries – all countries in the world with a population exceeding 2 million. For all countries, the index uses a single source, allowing us to compare the amount of uncertainty across them.

Additional information

Funding

This work was supported by the National Office for Philosophy and Social Sciences [20BJY021].