The Role of Oil Prices, and Inflation on Gold Prices in the Middle East
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Date
2024
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Publisher
University of Sussex
Abstract
This study investigates the dynamic relationship between oil prices, inflation, and gold prices within the context of Middle Eastern economies. Using advanced econometric techniques, including Vector Error Correction Models (VECM) and cointegration tests, the analysis reveals that fluctuations in oil prices significantly influence gold prices in the region, overshadowing the impact of inflation. Given the heavy reliance of Middle Eastern countries on oil exports, understanding these interconnections is crucial for policymakers, investors, and economic planners. The findings underscore the role of gold as a strategic hedge against oil price volatility and provide actionable insights for improving economic resilience and investment strategies. This research contributes to the broader discourse on commodity markets and macroeconomic stability in oil-dependent regions.
Description
This study investigates the dynamic relationship between oil prices, inflation, and gold prices within the context of Middle Eastern economies. Using advanced econometric techniques, including Vector Error Correction Models (VECM) and cointegration tests, the analysis reveals that fluctuations in oil prices significantly influence gold prices in the region, overshadowing the impact of inflation. Given the heavy reliance of Middle Eastern countries on oil exports, understanding these interconnections is crucial for policymakers, investors, and economic planners. The findings underscore the role of gold as a strategic hedge against oil price volatility and provide actionable insights for improving economic resilience and investment strategies. This research contributes to the broader discourse on commodity markets and macroeconomic stability in oil-dependent regions.
Keywords
Oil Prices, Gold Prices, Inflation, Middle East Economy, Commodity Markets, Econometric Analysis, Hedging Strategies, Financial Markets, Economic Policy, VECM (Vector Error Correction Model)