Can news-based economic sentiment predict bubbles in precious metal markets?

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    13 Citations (Scopus)

    Abstract

    This study examines the role of market sentiment in predicting the price bubbles of four strategic metal commodities (gold, silver, palladium, and platinum) from January 1985 to August 2020. It is the first to investigate this topic using sentiment indices, including news-based economic and consumer-based sentiments developed using different methods. We observed the role of sentiment as a reliable indicator of future bubbles for some metal commodities and found that bubbles were regularly concomitant with bearish sentiments for gold and platinum. Moreover, gold and palladium were the only commodities that experienced a bubble during the COVID-19 pandemic. Overall, our findings suggest inclusion of sentiment to the model that predicts the price bubbles of precious metals.

    Original languageEnglish
    Article number35
    JournalFinancial Innovation
    Volume8
    Issue number1
    DOIs
    Publication statusPublished - Dec 2022

    Keywords

    • Asset price bubbles
    • Market sentiment
    • Precious metals

    ASJC Scopus subject areas

    • Finance
    • Management of Technology and Innovation

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