Business cycles, co-movement and time varying causality: Exploring the relationship between inflation, real interest rates, and precious metals

This paper examines business cycle dynamics in domestic inflation rates, real interest rates, and global precious metal prices, namely, gold, silver, and platinum, across six advanced economies with substantial gold reserves: the USA, Germany, Italy, France, Switzerland, and the Netherlands, over the July 1999 to December 2024 period. Using the Bry-Boschan turning point detection, wavelet coherence, and time-varying Granger causality methods, cyclical patterns, co-movement, and evolving causal relationships are examined. The findings reveal that these interactions are heterogeneous across metals, countries, and monetary policy regimes, with both their strength and persistence varying over time. While gold exhibits comparatively weaker and more fragmented macroeconomic linkages, silver and platinum display broader and more persistent synchronization, particularly in the United States and Germany. The overall evidence highlights the dynamic and multidimensional nature of precious metal-macroeconomic interactions, demonstrating that their relationships with inflation and real interest rates evolve across countries and economic conditions rather than remaining stable over time.