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Correlation between COVID-19 cases and gold price fluctuation
RoshanGautam,YoochanKim,ErkanTopal,MichaelHitch
International Journal of Mining Reclamation and Environment Pub Date : 05/23/2022 00:00:00 , DOI:10.1080/17480930.2022.2077542
Abstract
ABSTRACTCovid-19 has damaged the global economy, as the series of lockdowns had negative impacts on the global economy. Investors around the world invested heavily in gold, and as a result, steep increase occurred. This study was intended to determine the relationship between COVID-19 infection rates and the price of gold, using different statistical analyses. Johansen cointegration test revealed that cointegration existed from a lag of 0 to 21 days, yet no relationship was observed from day 22 onwards. Also, Granger causality test revealed that gold price had a significant response to increasing COVID-19 cases. Conversely, gold price did not have Granger causes on the COVID-19 infection rates. Furthermore, the Vector Error Correction Model (VECM) result indicated that a 1% increase in COVID-19 cases led to a 0.0166% increase in gold price. Considering the exponential growth in COVID-19 cases of 17.38% average growth per day during the period from 1 January 2020 to 31 March 2022, 0.2885% increase in gold price per day has been attributed from COVID-19 cases. The sequential methodology presented in this paper is useful to potential gold investors in understanding the responsiveness of gold price to global pandemics and forecasting future gold prices during such global crises.
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