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Mind the gap: Psychological barriers in gold and silver prices

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  • Lucey, Michael E.
  • O'Connor, Fergal A.

Abstract

This study tests whether psychological barriers exist around key reference points in gold and silver prices, namely numbers ending in 0 (e.g. $450) and 00 (e.g. $200). Initial observations and tests show gold prices fix less frequently on values ending in 0 and 00, suggesting barriers at these levels which manifest as gaps in the frequency distributions. Statistical tests find support for barriers at numbers ending in 0 and 00 for gold. While initial observations and tests suggest silver prices are not uniformly distributed, there is no statistically significant evidence to support that barriers exist at either 0 or 00.

Suggested Citation

  • Lucey, Michael E. & O'Connor, Fergal A., 2016. "Mind the gap: Psychological barriers in gold and silver prices," Finance Research Letters, Elsevier, vol. 17(C), pages 135-140.
    • Handle: RePEc:eee:finlet:v:17:y:2016:i:c:p:135-140
    DOI: 10.1016/j.frl.2016.03.009
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    References listed on IDEAS

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    Cited by:

    1. Mishra, Bibhuti Ranjan & Pradhan, Ashis Kumar & Tiwari, Aviral Kumar & Shahbaz, Muhammad, 2019. "The dynamic causality between gold and silver prices in India: Evidence using time-varying and non-linear approaches," Resources Policy, Elsevier, vol. 62(C), pages 66-76.
    2. Liu, Guo-Dong & Su, Chi-Wei, 2019. "The dynamic causality between gold and silver prices in China market: A rolling window bootstrap approach," Finance Research Letters, Elsevier, vol. 28(C), pages 101-106.
    3. Baur, Dirk G. & Dichtl, Hubert & Drobetz, Wolfgang & Wendt, Viktoria-Sophie, 2020. "Investing in gold – Market timing or buy-and-hold?," International Review of Financial Analysis, Elsevier, vol. 71(C).
    4. Júlio Lobão & Natércia Fortuna & Franklin Silva, 2020. "Do psychological barriers exist in Latin American stock markets?," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 35(2), pages 29-56, October.
    5. Bhootra, Ajay, 2018. "Another look at anchoring and stock return predictability," Finance Research Letters, Elsevier, vol. 25(C), pages 259-265.

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