U.S. Inflation, Volatility and Credit Risk

• Levin and Wright found a positive relationship between gold price movements and U.S. inflation, inflation volatility and credit risk. When these factors increase, so does the price of gold.
  
  

U.S. Dollar Exchange Rate

• The study found a negative relationship between the U.S. dollar trade-weighted exchange rate and gold prices. When the value of the dollar goes down, the value of gold goes up.
  
  

Global Factors Unimportant

• Levin and Wright's study found no relationship between gold prices and world inflation, world inflation volatility or world income.
  
  

Recovery From Shock

• After any of these short-run "shocks" to gold prices, a slow reversal toward the long-term trend begins. Historically, it has taken about five years for two-thirds of the relationship to be reverted to the long-term pattern.