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Geopolitical risk and gold price bubbles

Haonan Zhou & Chao Liang

Review of Accounting and Finance2025https://doi.org/10.1108/raf-09-2024-0369article
AJG 2ABDC B
Weight
0.62

What the paper says

Purpose This study aims to investigate the relationship between geopolitical risk (GPR) and gold price bubbles to determine whether rising GPR can drive deviations in the fundamental value of gold, thus leading to speculative bubbles. Design/methodology/approach Using a data set that spans from January 2002 to December 2023 and covers both GPR data and gold price data, this study applies the log-periodic power law singularity (LPPLS) model to identify gold price bubbles. The analysis explores the effects of GPR and its sub-indices – geopolitical risk–acts (GPRA) and geopolitical risk–threats (GPRT) – on gold price bubbles. The causal relationships are examined through logistic regression, Tobit modelling and machine learning, with a focus on different countries, including major gold producers and consumers. Findings The results indicate a significant relationship between GPR and gold price bubbles, particularly with GPRA, which exerts a stronger influence than GPRT does. Peaks in GPR often align with the formation of gold price bubbles, both positive and negative. Additionally, geopolitical instability in Russia has a significant effect on US gold price bubbles. Practical implications The findings provide valuable insights for investors and policymakers by emphasizing the importance of GPR in shaping gold price dynamics. Investors are advised to consider the nuanced roles of GPRA and GPRT when using gold as a hedge during periods of heightened geopolitical tension. Social implications Understanding the role of GPR in gold price bubbles can help mitigate the financial risk associated with speculative bubbles, thereby offering a better framework for managing assets during geopolitical crises. Originality/value This study extends existing research by directly linking GPR with gold price bubbles via the LPPLS model, with a novel emphasis on the differentiation between GPRA and GPRT, providing new perspectives on the safe-haven role of gold during geopolitical uncertainty.

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https://doi.org/https://doi.org/10.1108/raf-09-2024-0369

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@article{haonan2025,
  title        = {{Geopolitical risk and gold price bubbles}},
  author       = {Haonan Zhou & Chao Liang},
  journal      = {Review of Accounting and Finance},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1108/raf-09-2024-0369},
}

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Geopolitical risk and gold price bubbles

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Evidence weight

0.62

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.64 × 0.4 = 0.26
M · momentum0.90 × 0.15 = 0.14
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.