Does Volume of Gold Consumption Influence the World Gold Price?
Round 1
Reviewer 1 Report
Accept in present form.
Author Response
Comments from Reviewer 1:
Comments and Suggestions for Authors : Accept in present form.
Author Response: We sincerely appreciate the reviewer for spending his valuable time reviewing our manuscript. We express our gratitude for all the comments and suggestions which helped us to improve the quality of our manuscript.
Reviewer 2 Report
I appreciate the effort of the authors to enhance the paper, which is improved with respect to the first version.
However, I'm not quite satisfied by some replies that, in my opinion, do not get the point.
Overall, the idea of the paper is interesting, but there are some serious issues to be considered to make the results convincing.
I list below the various comments.
Comment 1.
Probably I was not clear in writing my question. How can you conclude that price is driven mainly by physical demand, without including in the analysis other variables than physical demand? Considering only physical demand, there is no way to compare other variables. I mentioned just as an example future prices, but other drivers can be GDP, inflation, interest rates, stock indexes, ... In fact, using only the Standard and Poor Index price and the gold price, I found that the spx Granger-cause (first difference VAR) the gold price, but this is not enough to conclude that the spx is the main driver of gold price.
Comment 2.
The introduction is improved and some mistakes are mended.
Comment 3.
Some mistakes and missing parts are mended. Nevertheless, I still have some questions.
It is not clear in the paper, whether all raw data are quarterly. It seems they are: From Figure 1 and Table 2, even prices (even though gold prices are available for a higher frequency, from the site you indicated). Therefore, my question is still unanswered: why do you interpolate monthly values? It would make sense in the case at least one series contains monthly observations. Otherwise, it is only an artificial increase of the sample size, without adding information.
In addition, I do not see the point in using AM and PM prices in low-frequency analysis.
Moreover, I wonder why Russia and Indonesia are not included in the sample, provided that their demand is larger than Japan's.
Comment 4.
Skewness values around 1 or even larger, in my opinion, cannot be defined as a "slight variation" with respect to 0.
The interpretation of unit root tests (lines 329-331) is wrong: the opposite case occurs. Otherwise, it would not be consistent with the cointegration analysis. Moreover, this fact requires estimating the VAR on the first differences, making the results shown in the following unreliable.
I am sorry, but I still think the paper in this form is not suitable for publication.
Author Response
Please see the attachment
Author Response File: 
Author Response.docx
Reviewer 3 Report
No further comments.
Author Response
Comments and Suggestions for Authors: No further comments.
Author Response: We sincerely appreciate the reviewer for spending his valuable time reviewing our manuscript. We express our gratitude for all the comments and suggestions which helped us to improve the quality of our manuscript.
Round 2
Reviewer 2 Report
I am sorry to reject again this paper, but the main problems pointed out in previous revisions have not been solved. I think the basic idea can be interesting, but the data analysis, which is the same as in the first draft, is not satisfactory.
Some details are included in the attached file.
Comments for author File: 
Comments.pdf
This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.
Round 1
Reviewer 1 Report
Does Volume of Gold Consumption Influence The World Gold Price?
The current manuscript is written and presented with few details in the research steps and results. Some points are required to improve or clarify.
- There is no research hypothesis constructed and empirically tested in this paper. It will be more rigorous if research hypotheses are constructed from theories and/or existing literature.
2. On page 2, in first paragraph, there are abbreviations (LBMA, AM, PM). Please explain first time they appear in the paper.
- There are too many pages for explain the methodology of the paper.
- In the chapter 4, Results and Discussion it is better to start with a general presentation not with subchapter. Every subchapter must start with the reason of this analysis not with a figure or a table.
- Please provide more interpretations in the 4.7 subchapter.
- I don’t understand the ending part of chapter 1: The introduction should briefly place the study in a broad context and highlight why it is important. It should define the purpose of the work and its significance. The current state of the research field should be carefully reviewed and key publications cited. Please highlight controversial and diverging hypotheses when necessary. Finally, briefly mention the main aim of the work and highlight the principal conclusions. As far as possible, please keep the introduction comprehensible to scientists outside your particular field of research. All the references mentioned in 59 the text should be cited in the “Author-Date” format—e.g., (Baranwal and Munteanu [1921] 60 1955), (Berry and Smith 1999), (Cojocaru et al. 1999) or Driver et al. (2000). See the end of the 61 document for further details on references
Reviewer 2 Report
I have two major concerns about this paper.
1. The paper cited studies that show the futures market is where the price is set. Yet, without much deliberation, the paper decided to use LBMA fix prices as the dependent variable. It would be more interesting to present the results from both price series and compare their robustness.
2. The paper uses only quarterly data. By doing so, it misses out on the potential to look at the seasonal effect of consumption around major holidays in China and India.
Minor concern: The contribution to the literature of this paper is very low. For any commodity, demand is a huge factor in driving price movements. But gold has a unique economic value, according to some, that few other commodities can claim: an inflation hedge. But arguing that demand can influence price, it can nullify the inflation hedge argument. It would be a much more interesting article to read if the paper shows that it is demand that drives the price, not inflation.
Reviewer 3 Report
Although the research question seems relevant, in my opinion, the study is not satisfying, and the presentation should be revised.
First of all, the conclusion is that physical demand, mainly from India and China, is the main driver of gold price. Your data concern gold price and demand volumes only. To conclude that physical demand is the main factor, it is necessary to include other factors to make a comparison. For example, the demand for future contracts.
I add some details about the various sections.
Section1
I think the introduction is too much focused on India. Moreover, from line 44 on, the writing is unclear, and the arguments seem inappropriate or trivial.
Section2
The introduction of the review of the literature should be written in a better way.
The section should be rewritten in a more organized way, giving a structure and explaining the relation between the topics.
Different conventions are used for citations. Also, I do not understand why some citations stay in endnotes.
Section 3
Indicate precisely what kind of data you are using.
Europe and the Middle East are not single countries, and they can be defined in different ways.
I understood that raw data are quarterly for all the considered variables. So why monthly data are interpolated? This does not add any information.
What is the difference between what is written in lines 126-7, and lines 132-3?
The econometric part is not written in a clear way. For example, matrix Pi (line 152) is not defined.
Section 4
In Figure 3, the pice is AM or PM?
Some descriptive are missing, others are useless (sum).
Line 296: the skewness is not near zero for all variables.
I did not find any measure of goodness of fit of the models.
Overall, I do not think the paper in this form is suitable for pubblication.
