The Impact of Gold Price Changes on Saudi Stock Market

Conference Paper

• Conference Name: MDI Global Conference on Managing in Recovering Markets
• Conference Location: MDI Gurgaon, India
• Conference Date: Wednesday, March 5, 2014
• Sponsoring Organization: King Saud university

Publication Abstract

In investment analysis gold and stock are alternate sources of investment. Gold is very important financial asset, 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 stock Index (TASI) has huge market value in the region, reached 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 years monthly dataset from 31th October 2004 to 30th November 2013 using the tool Ordinary Least Squared (OLS) method.
The investigation applying the Simple Regression through Ordinary Least Square (OLS) method shows that TASI react negatively to gold price movement. This research also examines the relationship between gold prices and two important sectors index i.e. Banking & Financial Services (TBFSI) & Telecom and Information Sector (TTISI) form about 30% of TASI weight, all these sectors show a negative reaction to gold price.
As the Asian as well as the global market is showing the recovery trend after the turmoil and slow down so 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 so the relationship of equity and commodity relationship which we think tried to be addressed in this paper.