Can news-based economic sentiment predict bubbles in precious metal markets?

Aktham Maghyereh and Hussein Abdoh ()
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Hussein Abdoh: The Citadel: The Military College of South Carolina

Financial Innovation, 2022, vol. 8, issue 1, 1-29

Abstract: Abstract This study examines the role of market sentiment in predicting the price bubbles of four strategic metal commodities (gold, silver, palladium, and platinum) from January 1985 to August 2020. It is the first to investigate this topic using sentiment indices, including news-based economic and consumer-based sentiments developed using different methods. We observed the role of sentiment as a reliable indicator of future bubbles for some metal commodities and found that bubbles were regularly concomitant with bearish sentiments for gold and platinum. Moreover, gold and palladium were the only commodities that experienced a bubble during the COVID-19 pandemic. Overall, our findings suggest inclusion of sentiment to the model that predicts the price bubbles of precious metals.

Keywords: Asset price bubbles; Market sentiment; Precious metals (search for similar items in EconPapers)
JEL-codes: C15 C32 G12 G40 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (6)

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DOI: 10.1186/s40854-022-00341-w

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