Causal Relationship Analysis Between Oil Price Index and Precious Metals Price Index

This paper examines the relationship between oil prices and precious metals (gold, silver, palladium, and platinum) prices during periods of economic turbulence and geopolitical events. Using discrete wavelet transform technology, the time series data is decomposed to extract new forms of short-term, medium-term, and long-term time series. A vector autoregression (VAR) model is then established to perform Granger causality tests and impulse response analyses between oil prices and precious metals prices. The results indicate that oil, gold, and silver have strong market influence, while platinum and palladium have relatively weaker influence. In the short term, oil has a unidirectional Granger causality effect on gold and silver. In the medium term, oil and gold, as well as oil and silver, exhibit bidirectional Granger causality. In the long term, oil and platinum demonstrate bidirectional Granger causality. Additionally, in the short term, the impulse response between gold, silver, and oil is significant, revealing notable short-term dynamic relationships among these three variables.