DATA ANALYSIS & INTERPRETATION

Descriptive Statistics N 10 gm Gold Price Valid N (listwise) 52 52 Minimum 8694.86 Maximum 18744.62 Mean 1.2429E4 Std. Deviation 3124.78454

INFERENCE
10 gm gold price starting from April 2006 till July 2010 has the highest value as Rs.18744 and lowest value as Rs. 8694.86 with the standard deviation 3124.78454

Correlations 10 gm Gold Price 10 gm Gold Price Pearson Correlation Sig. (2-tailed) N Expected inflation Pearson Correlation Sig. (2-tailed) N 52 .190 .177 52 52 1 Expected inflation .190 .177 52 1

INFERENCE The Pearson correlation co-efficient is 0.190, but the significance is not different from 0. Hence Inflation does not have significant correlation with gold price.

Correlations Expected Interest rate for period of 10 gm Gold Price 10 gm Gold Price Pearson Correlation Sig. (2-tailed) N Expected Interest rate for period of 1 to3 years deposits Pearson Correlation Sig. (2-tailed) N 52 -.752** .000 52 52 1 1 to3 years deposits -.752** .000 52 1

**. Correlation is significant at the 0.01 level (2-tailed).

INFERENCE Pearson correlation co-efficient is -0.752 and the significance is very high. Hence gold price and interest rate has got relatively strong negative correlation

Correlations Foreign 10 gm Gold Price 10 gm Gold Price Pearson Correlation Sig. (2-tailed) N Foreign Exchange - year end Pearson Correlation Sig. (2-tailed) N **. Correlation is significant at the 0.01 level (2-tailed). 52 .440** .001 52 52 1 Exchange - year end .440** .001 52 1

INFERENCE Pearson correlation co-efficient is 0.44 and the significance is very high. Hence gold price and foreign exchange rate has relatively strong positive correlation

Correlations 10 gm Gold Price 10 gm Gold Price Pearson Correlation Sig. (2-tailed) N Stock market performance Pearson Correlation Sig. (2-tailed) N 52 .257 .066 52 52 1 Stock market performance .257 .066 52 1

INFERENCE Pearson correlation co-efficient is 0.257, but the significance is not different from 0. Hence stock market performance and gold price does not have significant correlation

Correlations 10 gm Gold Price 10 gm Gold Price Pearson Correlation Sig. (2-tailed) N 1 kg Silver price Pearson Correlation Sig. (2-tailed) N **. Correlation is significant at the 0.01 level (2-tailed). 52 .872** .000 52 52 1 1 kg Silver price .872** .000 52 1

INFERENCE Pearson correlation co-efficient is 0.872 and the significance is very high. Hence gold price and silver price has relatively strong positive correlation

Correlations 10 gm Gold Price 10 gm Gold Price Pearson Correlation Sig. (2-tailed) N 1 month lagged gold price Pearson Correlation Sig. (2-tailed) N **. Correlation is significant at the 0.01 level (2-tailed). 52 .983** .000 51 51 1 1 month lagged gold price .983** .000 51 1

INFERENCE Pearson correlation co-efficient is 0.983 and the significance is very high. Hence gold price and one month lagged gold price has relatively strong positive correlation

Correlations 10 gm Gold Price 10 gm Gold Price Pearson Correlation Sig. (2-tailed) N MCX spot crude oil price in Rs/bbl Pearson Correlation Sig. (2-tailed) N 52 .174 .218 52 52 1 MCX spot crude oil price in Rs/bbl .174 .218 52 1

INFERENCE Pearson correlation co-efficient is 0.174, but the significance is not different from 0. Hence oil price and gold price does not have significant correlation.

Regression

Variables Entered/Removeda Variables Model 1 Entered Variables Removed Method Stepwise (Criteria: Probabilityof-F-to1 month lagged gold price . enter <= . 050, Probabilityof-F-toremove >= . 100). 2 Stepwise (Criteria: Probabilityof-F-to1 kg Silver price . enter <= . 050, Probabilityof-F-toremove >= . 100). a. Dependent Variable: 10 gm Gold Price

Model Summary Adjusted R Model 1 2 R .983a .985b R Square .967 .970 Square .967 .969 Std. Error of the Estimate 570.21683 552.04130

a. Predictors: (Constant), 1 month lagged gold price b. Predictors: (Constant), 1 month lagged gold price, 1 kg Silver price

ANOVAc Model 1 Regression Residual Total 2 Regression Residual Total Sum of Squares 4.700E8 1.593E7 4.859E8 4.713E8 1.463E7 4.859E8 df 1 49 50 2 48 50 2.356E8 304749.593 773.183 .000b Mean Square 4.700E8 325147.228 F 1.445E3 Sig. .000a

a. Predictors: (Constant), 1 month lagged gold price b. Predictors: (Constant), 1 month lagged gold price, 1 kg Silver price c. Dependent Variable: 10 gm Gold Price

Coefficientsa Standardized Unstandardized Coefficients Model 1 (Constant) 1 month lagged gold price 2 (Constant) 1 month lagged gold price 1 kg Silver price a. Dependent Variable: 10 gm Gold Price B 92.594 1.007 -609.616 .918 .082 Std. Error 335.898 .026 470.072 .050 .040 .896 .102 .983 Coefficients Beta t .276 38.018 -1.297 18.226 2.069 Sig. .784 .000 .201 .000 .044

Excluded Variablesc Collinearity Partial Model 1 Expected Interest rate for period of 1 to3 years deposits Foreign Exchange - year end 1 kg Silver price 2 Expected Interest rate for period of 1 to3 years deposits Foreign Exchange - year end -.028b -.985 .330 -.142 .769 -.055b -1.408 .166 -.201 .407 -.020a .102a -.693 2.069 .492 .044 -.099 .286 .781 .260 -.038a -.947 .348 -.135 .422 Beta In t Sig. Correlation Statistics Tolerance

a. Predictors in the Model: (Constant), 1 month lagged gold price b. Predictors in the Model: (Constant), 1 month lagged gold price, 1 kg Silver price c. Dependent Variable: 10 gm Gold Price

INFERENCE Stepwise regression method is used for model selection in order to include only the most useful variables in the model. 1 month lagged gold price was chosen first because it is the predictor that is most highly correlated with gold price. The remaining predictors are then analyzed to determine which, if any, is the most suitable for inclusion at the next step. Next best variable is selected based on the partial correlation, which is the linear correlation between the proposed predictor and the dependent variable after removing the effect of the current model. R, , the multiple correlation coefficient is .983 for the first equation and .985 for the second equation considering both one month lagged gold price and 1 kg silver price. R Square, the coefficient of determination
is .967 for the first equation and .970 for the second equation shows that 97% of the variation in gold price is explained by the model. The model summary table reports the strength of the relationship between the model and the dependent variable. The ANOVA table tests the acceptability of the model from a statistical perspective. The Regression row displays information about the variation accounted for by the model. The Residual row displays information about the variation that is not accounted for by the model. If the significance value of the F statistic is 0.000, which means that the variation explained by the model is not due to chance.

From the table that shows the co-efficients of regression line, the equations are

1. 10 gm gold price = 92.594 + 1.007* 1 month lagged price 2. 10 gm gold price = 0.918 * 1 month lagged price + 0.82 * 1 kg silver price - 0.609.616