Gold has been a popular investment for people throughout history and today, it
has been used as currency and a hedge against inflation. It has been recommended
that investors hold between 10% and 25% of their investments in gold depending on
the outlook of the economy. An economical method of investing in gold is to access
the gold futures market. Henceforth this study has attempted to forecast gold prices
based on historical prices and volumes in the gold futures market. As yet quantitative
research has proved inadequate in providing a model to successfully trade or invest in
the gold futures market. An alternative method of approaching this gap in the research
has been provided by this qualitative study.
A comprehensive literature review was conducted that highlighted important
previous research on the gold futures market. This provided the study with a base to
build on. In-depth interviews with experts in the gold futures industry were than used
to provide insight into macroeconomic factors and technical analysis techniques to
help forecast price and volume in the gold futures market. After the in-depth
interviews were documented, over 32 years of price and volume gold futures data was
displayed and analyzed using quantitative methods.
Quantitative analysis in this research area was once again ineffective in
providing guidance to forecast the gold futures market. Technical analysis was then
used to demonstrate its effectiveness in forecasting prices and volumes in the gold
futures market. When used in combination with the in-depth interview findings, and
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literature review, it was found that the gold futures market could be forecasted
successful, as long as risk management was adopted and a trading plan existed.
The implications for this study are that price and volume in the gold futures
market can be forecasted interpreted using the right techniques as mentioned above. A
quantitative model on its own however will not be effective in forecasting the gold
futures market. Macroeconomic variables in combination with technical analysis and
risk management are the most suitable method to forecast price and volume in the
gold futures market. The technical analysis section of this study can also be used in an
array of financial trading instruments; however fundamentals and macroeconomic
factors will differ greatly from the gold futures market.

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