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The Impact of Gold Price Changes on Saudi Stock Market

In: Managing in Recovering Markets

Author

Listed:
  • Durga Prasad Samontaray

    (King Saud University)

  • Ahmed Awad Alanuzi

    (Saudi Telecom Company (STC))

Abstract

In investment analysis gold and stock are alternate sources of investment. Gold is a very important financial asset, and in financial crises usually investors look at gold as the safe haven for them. Stock market is one of the most important aspects of the economy, in Saudi Arabia; Tadawul All Share Index (TASI) has huge market value in the region, reaching the value 1.4 trillion in 2012. In this paper, we have investigated the long-run relationship between gold prices and Saudi stock market, using 10-year monthly data set from 31 October 2004 to 30 November 2013 using the tool Ordinary Least Squares (OLS) method. The investigation applying the simple regression through Ordinary Least Squares (OLS) method shows that TASI reacts negatively to gold price movement. This research also examines the relationship between gold prices and two important sector indexes, i.e., banking and financial services (TBFSI) and telecom and information sector (TTISI) form about 30 % of TASI weight; all these sectors show a negative reaction to gold price ( www.tadawul.com.sa ). As the Asian as well as the global market is showing the recovery trend after the turmoil and slowdown, we carried out this research to show the investors and analysts and the researchers the impact of gold on the security market taking the Saudi perspective. It is very important to show the relationship of equity and commodity which we think tried to be addressed in this paper.

Suggested Citation

  • Durga Prasad Samontaray & Ahmed Awad Alanuzi, 2015. "The Impact of Gold Price Changes on Saudi Stock Market," Springer Proceedings in Business and Economics, in: S. Chatterjee & N.P. Singh & D.P. Goyal & Narain Gupta (ed.), Managing in Recovering Markets, edition 127, chapter 0, pages 461-471, Springer.
    • Handle: RePEc:spr:prbchp:978-81-322-1979-8_37
    DOI: 10.1007/978-81-322-1979-8_37
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    Citations

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    Cited by:

    1. Alqahtani, Faisal & Hamdi, Besma & Hammoudeh, Shawkat, 2021. "The effects of global factors on the Saudi Arabia equity market by firm size: Implications for risk management based on quantile analysis and frequency domain causality," Journal of Multinational Financial Management, Elsevier, vol. 61(C).
    2. Mansoor Alam Khan & Riaz Ahmad & Dr. Muhammad Akram & Hafiz Muhammad Ishaq, 2021. "The Effect Of Macroeconomic Indicators On Stock Market: A Study On Asian Economies," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 10(1), pages 114-127, March.
    3. S R, Shehnaz & S, Suresh Kumar, 2016. "Gold prices and Nifty – Unravelling of an intricately interwoven nexus," MPRA Paper 109184, University Library of Munich, Germany.

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