Page 37 - Bullion World Volume 02 Issue 10 October 2022

Bullion World | Volume 2 | Issue 10 | October 2022

Scenario Analysis

of Gold Market

wealth, which signifies safe storage, gold prices moved more than +/-5%
in addition to being a hedge. during that event period. Let us
understand all the six scenarios:
In order to study scenario analysis
of the gold market, various events Scenario 1: Crash in other Asset
that have impacted gold prices Classes or Market
historically from the year 2000 to In the 21st century, all asset classes
2021 are primarily studied. The are interlinked with each other,
dates during which each of these no asset class stays in isolation.
events existed were first determined With this Intermarket analysis
in order to make these comparisons. background, gold prices are also
The closing price of the international impacted by booms or crashes
gold price ($/oz) and Indian gold in other asset classes like Equity,
prices (Rs /10 gm) at the start of the Commodities, Currencies, Bonds,
Dr Renisha Chainani event and closing price at the end of and Cryptocurrency. Positive
Head – Research the event are taken and % change is or Negative relationship exists
AUGMONT – GOLD FOR ALL calculated. As the market discount based on the business cycles and

all news in advance in prices, environment. Sometimes there is a
Consider what humourist and sometimes announcement dates spill-over effect which causes gold
writer Mark Twain said: "History or news dates are also considered, prices to have a positive relationship
Doesn't Repeat Itself, But It Often rather than taking the actual starting with other asset classes. And
Rhymes." Financial history is littered date. sometimes it is a safe-haven appeal,
with boom-bust cycles, and the which leads to gold having an
recurrence of these cycles leads one There are 36 such events, which inverse relationship with other asset
to believe that history repeats itself. made a significant impact on gold classes.
However, the underlying theme, prices during this period,
financial asset, participants, and which are grouped into
events differ in each case. There are six scenarios, as per their
recurring cycles, ups and downs, similarity and occurrence.
but the overall course of events is Gold prices react quickly
consistent, with minor variations. to global events. Some
History, it has been said, repeats of these occurrences,
itself. This may not be entirely however, stand out
correct; it simply rhymes. That is the because they had a major
reason that financial advisor studies impact on the conditional
the history of various asset classes mean and volatility of
to get a better return by forecasting gold prices. Only those
future prices. Out of all the asset events were taken into
classes – Equity, Commodity, Debt, consideration which had a
and Currency – Gold has been a significant impact on gold
favourite topic of research for many prices. The significant
researchers. Gold is a store of impact here means that

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