Gold Price Fluctuations Affecting to People's Purchasing Power with Interest Rate as Moderating Effect in Indonesia

Abstract

This study aims to analyze the effect of gold prices on inflation, purchasing power, and exchange rates in Indonesia during the period 1995-2024. Gold is a hedging investment that is sensitive to changes in exchange rates, global economic turmoil, and market risk perceptions. Rising gold prices often reflect uncertainty in economic terms, which can lead to inflation due to an increase in goods and services. Uncontrolled inflation has a negative impact on people's purchasing power, especially in fixed income groups. Conversely, people who have gold investments may experience an increase in nominal wealth, thus potentially increasing income indirectly. This study uses a quantitative approach with secondary data from the Central Bureau of Statistics (BPS), Bank Indonesia, and the World Gold Council. The results of the analysis show a positive relationship between the increase in gold prices and inflation, as well as a negative correlation with people's purchasing power, but the increase in gold prices has an impact on the increase (appreciation) of the dollar against IDR and the value of IDR depreciates.