Analysing the Impact of Interest Rates and Inflation on the Volatility of Gold Prices

Abstract

                This study investigates the influence of interest rates and inflation on fluctuations in gold prices using a quantitative research framework. Secondary time-series data on gold prices, interest rates, and inflation were collected and examined to understand how different macroeconomic conditions affect gold price volatility over time. Statistical tools were applied to identify patterns and relationships among these variables. A t-test was used to compare average gold price volatility during periods of relatively high and low interest rates, while a one-way ANOVA was conducted to evaluate differences in volatility across varying inflation levels. The analysis indicates that both interest rates and inflation play a meaningful role in shaping the movement and instability of gold prices. Periods marked by rising inflation tend to show greater variability in gold prices, supporting the view of gold as a protective asset during inflationary phases. At the same time, increases in interest rates influence volatility by changing the relative attractiveness of gold compared to interest-bearing financial instruments. Overall, the findings highlight that gold price behaviour is closely linked to key macroeconomic indicators. The study contributes practical insights for investors, policymakers, and financial analysts by improving understanding of how gold reacts under changing economic environments, thereby supporting more informed financial planning and investment decisions.