The paper "Cultural Value Economic Value and Purchasing Environment" is a great example of a Macro and Microeconomics Case Study. Gold is essentially among the oldest precious metals valued as a global currency, an investment, as well as a beauty object (Joseph, 2014). In the United Arab Emirates, Gold is more than a precious metal. In fact, it has become a major economic and component of the UAE. In the country, gold-buying behavior is contingent on several determinants and moderators. The four key determinants include economic value, cultural value, and purchasing environment.
The key moderators include nationality, gender, and personal income. This research seeks to explore both the determinants and moderators affecting gold-buying behavior in UAE. 3.1 Determinants 3.1.1. Economic value Gold is a major economic component of the UAE. Prabhakarrajkumar and Mohandass (2014) observe that while gold has traditionally hedged against internal currencies, such as inflation, and external currencies, it is its economic value and how it influences buyers’ behaviors that matters. Dalvi (2015) also indicates that the investor or buyers’ decision process is influenced by several factors including time, wealth maximization, income tax and issues of profitability.
He adds that gold is among the most valued metals because of its economic value attributes, conventional value, and high liquidity. According to Vel et al. (2011), some parts of the UAE perceived gold to be a crucial symbol of prosperity and fortune. The stability of the purchasing power capacity of gold, as well as the attributes of its fundamental value, ensure that it is a secure investment commodity, particularly in times of recession, which may be characterized by high risks like fluctuations of the exchange rate and inflation (Kumar & Singh, 2014).
For instance, a recent study by Honey (2013) of the Indian gold buying behavior revealed that 70 percent of consumers in Cochin, India chose gold as the main investment option compared to 9 percent of consumers that went for real-estate. According to Honey (2013), gold was selected due to its stable nature since its value does not diminish significantly, as well as due to its high returns. Therefore, gold is a secure asset option, as it is a safe investment option. A recent study in India by Honey (2013) indicated that gold is an investment option in Delhi and Cochin because it is a safe investment option.
The study revealed that in Cochin, 72 percent of consumers were likely to invest in gold, as it is a safe investment option, better returns, and its less risky nature compared to 67 percent in Delhi. Figure 1: reasons for gold- buying For this reason, the economic value of gold influences the consumer’ s behaviors. During the recession, Joseph (2014) explains that consumers feel more secure buying gold.
During the economic downturn, currency devaluation happens due to the fluctuation of commodity prices. For this reason, consumers are likely to buy gold to avoid losing the values of their investment (Prabhakarrajkumar & Mohandass, 2014). Indeed, scholarly researchers have indicated that gold can protect the investment. As a result, more investors are likely to buy gold. What this implies is that emotional and cognitive also influence investment decisions. Apart from the economic value, cultural values also play a crucial role in influencing the consumer’ s decisions to buy gold. Hence, the impact of cultural values is also highly significant when it comes to buying gold.
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