Gold prices, cost of carry, and expected inflation

How do changes in expected inflation affect gold prices? Using unexpected changes in the Consumer Price Index (CPI) this paper shows that surprises in the CPI do not affect gold spot prices. The results indicate that investors anticipating changes in inflation expectations should design speculation strategies in the bond markets rather than the gold markets. Additionally, investors cannot determine market inflation expectations by examining the price of gold.Inflation Bond yield Gold Cost of carry

A Gold Price Anomaly

This study examines returns on the COMEX front gold contract over the period 1985 through 2012. The results show that average overnight gold returns are significantly greater than average day returns. The cause of the anomaly is not known, but it is consistent with a high opening price that adjusts during the day. The result suggests that investors should not enter market buy orders when the market is closed to be executed at the price of the first trade. Enter the buy orders later in the morning after prices have adjusted. Similarly, investors selling gold are likely to get a higher price if the order is executed at the opening price