Determinants of the physical demand for gold: Evidence from panel data

Martha Starr () and Ky Tran

No 2007-09, Working Papers from American University, Department of Economics

Abstract: Although the role of gold in the world economy has declined since the gold standard was abandoned, it remains important as a central bank reserve, a hedge against risks, a barometer of geopolitical uncertainty, and an input for jewelry. While portfolio demand for gold has been well studied, determinants of physical demand are less understood. Certain emerging-market countries like China and India import substantial amounts of gold, with several factors that may contribute: low financial development, need for precautionary savings, and/or strong cultural valuation of gold itself. This paper uses panel data on gold imports of 21 countries to examine determinants of physical demand. We find that determinants of physical demand differ from those of portfolio demand, and that they differ between the developed and developing worlds.

Keywords: Physical gold demand; investment; savings; precautionary wealth (search for similar items in EconPapers)
JEL-codes: E21 G15 O16 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2007-07
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Citations: View citations in EconPapers (2)

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https://doi.org/10.17606/nzd6-tz08 First version, 2007 (application/pdf)

Related works:
Journal Article: Determinants of the Physical Demand for Gold: Evidence from Panel Data (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:amu:wpaper:0907

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