The Relationship between Selected Macro-Economic Factors and Gold Price in Pakistan

Abstract

The article tries to investigate the connection among particular economic indicators and the monetary value of gold in Pakistan. During this research, economic indicators include the value of the rupees, the selling price of crude oil, Pakistan's inflation level, and the actual Gross Domestic Product, or GDP, of Pakistan over a time frame of 2008 and 2018, and 11 years data. The Comsat University conducted study on the identical variables and subject described above in 2014, however they did not use the GDP as their independent variable, and the time period they chose was also different. The study "Fresh Insight through a Keynesian Theory Approach to Investigate the Economic Impact of the COVID-19 Pandemic in Pakistan" conducted in 2022 found that COVID-19 had a negative impact on the Pakistani economy because the study's data wasn't gathered after 2019. The goal of the research is to ascertain how every uncorrelated or independent factor affects the value of gold in the nation of Pakistan. In order to identify the major economic factors influencing the selling price of gold in the country of Pakistan, the present investigation employed a combination of multiple linear regressions (MLR), a correlation value, and EViews 12 to evaluate every piece of information. Statistics indicate a considerably favorable link among the value of gold and petroleum products such as crude oil. However, there is a considerable adverse association among the worth of gold and the rate of inflation. Actual Pakistani gross domestic product results in a favorable substantial connection with little effect on the value of gold. The association between the Rupee exchange rate and the market value of gold in Pakistan is positive and strong.