Effects Of Gold Price On Equity, Bond And Domestic Credit: Evidence From ASEAN+3

The gold market has seen a steady price rise in recent years. Obviously, factors affecting gold prices include the fundamentals of aesthetic and precautionary demand for gold. This paper, utilizes the GMM model to analyze the effects of gold price on equity, bond and domestic credit in the ASEAN+3 countries (Indonesia, Malaysia, the Philippines, Singapore, Thailand, China, Japan and South Korea). The results indicate that gold price significantly influences bond and equity market, particularly with any negative changes in equity market having positive effects on the price of gold. However, the effect that gold price has on domestic credit is not pronounced. The significant relationship between gold price, equity and bond market implies that the recent worldwide financial crisis and instability such as recession and deficit problems in the Euro zone and the US have increased the precautionary demand for gold in Southeast Asian countries, at least over the last five years. (C) 2012 Published by Elsevier Ltd. Selection and/ or peer-review under responsibility of the Asia Pacific Business Innovation and Technology Management Society Asia Pacific