Project Work
Project Work
Project Work
Gold was the first well-known metal of our species. When we ponder the
historical advancement of technology, we consider the development of iron and
copper labor to be the greatest contributor to the economic and cultural
advancement of our species, but gold came first. Gold has held its value and
has been used as a means of assessing a country's financial strength. Big
investors were attracted to this precious metal and invested large amounts in it.
In the early days, more money was invested in buying this basic product. Like
most commodities, the price of gold is determined by supply and demand,
including speculative demand. However, unlike most other raw materials,
savings and disposal play a bigger role in influencing your price. Small investors
also found this product to be a safe investment. Government investments in gold
are largely determined by your financial conditions and interest rates as they are
indicators of the strength of your economy. Activity is observed in the US, hence
capital inflows into the gold market. Various phenomena are associated with
gold rates and also affect the price. Gold spot prices are set twice a day based
on the supply and demand of the gold market. A slight change in the price of
gold can result in large gains or losses for both these investors and government
banks. The reason for the rise in the gold rate apparently lies in its incredible use
and it is also a very rare metal to be found. There are several other reasons for
the price intensification as well. Gold is used in various fields like finance, trade,
mechanical. Industrial, dental and medical applications account for
approximately 12% of the gold requirement. Gold has high thermal and electrical
conductivity properties as well as high resistance to corrosion and bacterial
colonization. It has fluctuated in recent years due to the constant expansion of
the middle classes in emerging markets seeking western lifestyles. To extract a
small amount of gold, a larger amount of gold ore could be used; along with a lot
of staff associated with it.if the ore is of lesser quality, only 5 grams of gold can
be extracted from a large ton of ore. In fact, this metal can be ductile, fluffy, and
malleable. easily in different ways. It becomes very flexible so that other metals
can be added to make useful ornaments, and this valuable product is used for
various purposes around the world.It has a decent cathode of power and heat. It
also has the ability to keep through any atmosphere; not affected by moisture,
air or the most dangerous or destructive elements. It is the best example of
reliable materials. In addition, the recycling of used jewelry has grown into a
multi-billion-dollar industry.
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LITERATURE REVIEW
The literature has dealt extensively with the subject of gold due to the high level
of interest not only from scientists and scholars, but also from investors and
governments seeking to develop existing academic material related to the yellow
metal. Several studies have examined the factors that affect gold. On the one
hand, price fluctuations and, on the other hand, attempts were made to create
predictive models. In fact, various machine learning techniques have been
studied to predict the price of gold. Several studies have examined factors that
can explain the variation in gold prices. For example, Qian et al. analyze the
main factors that determine and influence the gold price. The experiment was
performed with six different variables, namely the Dollar Index U., the Federal
Funds Rate U., the Consumer Price Index (CPI), and the U.The exchange rate
of the dollar to the Chinese yuan, the price of oil and the S & P 500 index. When
considering a significance level of 5%, the test result shows that without taking
into account the CPI and the oil price, all of the above-mentioned determinants
have a negative impact on the precious metal price. Singhal et al. In Mexico,
examine the long-term relationship between the price of West Texas
Intermediate (WTI) crude oil, the international spot price of gold, the US dollar to
Mexican peso USD / MXN exchange rate, and the Mexican stock exchange
“Index of Prices and Quotations (IPC). To assess the stochastic trend of the
variables, the study was based on tests of autoregressive distributed delay limits
(ARDL). The results show that the price of WTI crude oil has a negative impact
on the price of gold, while the latter has a positive impact on Mexico.
Assessment of share prices.2 Bilgin et al. Analysis of the factors influencing the
gold price, with an emphasis on uncertainty measures Four different steps were
used in the study: the global economic policy uncertainty index (GEPU) and the
party conflict index (P.), the Skewness Index (SKEW) and the Volatility Index
(VIX). The last two indicators mentioned relate to the risks and potential
fluctuations in the financial markets. The results of the study suggest that the
price of gold reacts to economic and economic uncertainties politically and can
be viewed as a safe haven as the yellow metal negatively correlates with political
and economic conditions. Using the same logic, Fang et al. He also relied on the
GEPU to weigh the importance of the data covered by the index in predicting
gold rates. The study was based on a generalized autoregressive model for
mixed data samples with conditional heteroscedasticity (GARCH-MIDAS). A
significant and positive influence on the volatility of the valuation of gold futures.
Not only economic and political factors influence the movement of the gold price,
but also social celebrations at which gold gifts are offered. In fact, Schmidbauer
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and Rösch examine the effects of festivals on the volatility of spot gold prices on
a daily basis.
The tests were based on 13 different holiday events around the world, such as
Ramadan Eid, Eid Al Adha, Christmas, New Years Eve, and Chinese New
Year.You build a model that combines regression with the GARCH model. The
results of Schmidbauer and Rösch show that various celebrations correlate with
fluctuations in the price of the yellow metal. In addition, several studies have
implemented predictive models to predict the future price of gold. or the pattern
of price volatility. Al-Dhuraibi and Ali. Like the one who tried to predict gold price
fluctuations by implementing machine learning algorithms dedicated to ranking.
To identify the future movement of the gold price, regression, decision tree,
supervised machine learning (SVM) and K-Nearest Neighbor (KNN). For their
analysis, Al-Dhuraibi and Ali relied on a single variable, which is a weekly
difference in the price of gold. Because classification algorithms are used on
categorical data, the weekly difference in gold price has been converted into two
classes, "+1" if the difference is positive (increase in t-movements) and "-1" if the
difference is negative (decreasing mobility). Finally, it was found that KNN is the
only algorithm that achieves an acceptable accuracy of 60.26% at K = 5.Unlike
classification models, Kemal used the Multilayer Neural Perceptron Network
(MLPNN) to predict the price of gold.
The explanatory variables of the model were the spot rate of the USD, the main
stock index of Turkey (BIST100), the price of Brent oil and silver. and copper
price and the weekly interest rate of the Central Bank of the Republic of Turkey.
Prices and various explanatory variables. In addition, the accuracy of the model
reaches 98.17%. Sami and Junjo combined different prediction models. In fact,
they use machine learning algorithms such as linear regression, neural
networks, and autoregressive moving average (ARMA) to predict the price of
gold. Data on banks and leading companies that have invested heavily in
precious metals. Studies have shown that, compared with major companies that
participate in the gold market through investment or mining, the US economy
has little impact on gold interest rates. For investors and policy makers in
Pakistan, the economy plays an important role in the decision making process,
Akbar et al. studied the relationship between gold prices and stocks and interest
rates. Akbar et al. used an autoregressive Bayesian vector model (Bayesian
VAR) to investigate the volatility of gold prices. The results show that gold can
be considered a safe haven. Note that in a turbulent environment, the rupee and
stock prices fall while the gold price rises.
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METHODOLOGY
3.1 Gold Investments
Since ancient times, the value of the precious metal has been high in various
periods despite the economic and financial crisis. For the past few years, the
value of the currency has fluctuated depending on the currency market, the price
of crude oil and inflation. The gold rate is also unstable. Investors or customers
have a higher risk of investing or buying them. Since gold is viewed as essential
to the core and a liquid asset around the world, trading is very easy. Hence, it is
widely used as a precious metal. The forecast for gold is of great help in
planning and implementing future investment results. Predicting the gold rate is
not only intended to give hope to people, but also to protect money in this
scenario as its value fluctuates dramatically. Units are traded like stocks, and
predicting stocks is always a challenging problem because their non-linearity
makes them non-trivial. As a result, shareholders will devote themselves to
protecting themselves from political and monetary expansion and social fiasco.
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analysis that we make. Data for attributes, such as date, open and closing
stock , high and low price of stock and adj.close and volume of stocks were
gathered. Data of many other stocks in addition with gold are scrapped from
yahoo finance. Price of all the stocks during this period is also included in
the analysis. Table below lists the attributes of data which are extracted for
the past 300 days.
The above listed dataset consists of 247 rows and 8 columns. Where 2
columns are used for the prediction of the future price. The two columns
which are used are date and the high attributes. The price of gold that is to
be predicted is taken in US Dollar. Here we do a lot of cleaning and
preprocessing techniques to remove the unwanted attributes. Missing
values are also treated to give the good prediction accuracy. Gold prices
change day to day and the daily changes have been recorded in the
analysis. The current gold rates higher in comparison with the previous
years. As we see huge variations in price, we decided to split the dataset in
a sequential split instead of random sampling. Therefore, the recent 30% of
the data has been used as the test set, and the earliest 70% of data has
been used for training. There is a major fluctuation in gold prices over the
past years, so recent historical data would be more indicative of the future
trend.This graph gives the trend of gold prices in the past 300 days.
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3.2 User Interface creation
In order make the analysis and prediction more interactive to the people, a
user interface has been built. This user interface has been created with the
help of html, css and javascript. Here the user will be able to see the live
chart of the rate of each commodity. Javascript is used to display the high
chart of the user interface. The search column allows the user to search for
the ticker symbol. A ticker symbol or stock symbol is an abbreviated form for
uniquely identifying publicly traded shares of a stock on a stock market. A
stock symbol may be a combination of letters, numbers or both. The stock
symbol for gold is GC = F. By searching this symbol it shows the trend and
the past history of the following searched stock as a map This search will
get the history of prices of the stock for the past 300 days. Here the index
will be reseted and the date acts as an index later. As this chart consists of
data and high value in the x and y axis respectively, dropping off the other
attributes to give the trend in a clear manner. The price here is used to
represent in USD. So it is easy for all the users around the world to use the
same conviction.The chart is designed in such a way that , users can use to
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compare with any other stocks with the help of it’s symbol. This user
interface has been deployed using the flask.
We get the input in the form of tickle data and fit the models and return back
the prediction result in the form of tickle, so there will be no change in the
prediction and the accuracy.
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3.4 Splitting of training and testing data
With the history of the dataset, the training set has been divided into 70%
and the testing set has been divided into 30% in order to give more
accuracy. The following are the machine learning models that are used to
predict almost the exact value in the future.
In the above where we’re analyzing each stock, we might presume the rate
of high, as being mutually independent, and consider them as the inputs.
The rate could be the outputs that depend on the inputs.
Decision tree classifiers try to form nodes in which they contain a high
proportion of data points from a particular or single class by finding the
values in features which divide the data into classes. It can be considered as
a nonlinear model which is built by many linear boundaries. In this model we
give both labels and features, and it classifies the points based on features.
The accuracy has gone down due to overfitting.
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3.7 Random forest model
Random forest is a bagging model that builds multiple decision trees and
merges them together to get a more accuracy in prediction. Random forest
has nearly the same hyperparameters as a decision tree classifier it is only a
bagging classifier. Random forest adds additional randomness to the model
that we fit the training data, while growing the trees. In Accordance with our
dataset, the random forest model gives the best accuracy. For the
application in the stock market, the Random Forest algorithm can be used to
identify a stock’s behaviour and the expected loss or profit can be
forecasted from the prediction model.
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Results and Discussion
With the help of the random forest classifier, we could get almost the exact
predicted value. For example, here the input date is given as 2021/11/26.
The predicted output by the random forest model is given as $1780.94. This
prediction estimation will give the stock market users and even normal
customers to easily use this interface.
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Fig 2. Gold Rate Prediction and Analysis
We've also predicted the gold rates for the following month of May. With the
help of these values, the regular actual values are to be compared and tested
for its acuteness.
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Conclusion
As gold proves to be a viable source of investment, the investment
opportunities has been expanded to huge numbers, and it arose a need for
predicting the future highs and lows that the commodity(gold) might hit. By
testing with different machine learning prediction models such as linear
regression, decision tree regression, random forest regression, it has been
established that random forest comes out with better accuracy in predicting
future gold rates. By building a web application that could possibly merit people
who are interested with investing in gold, it could benefit more number of
people worldwide as it has been hosted in heroku as well. Investors must also
include technical and fundamental analysis of the commodity to arrive at better
decisions.
Future Enhancements
Our first step would be updating our web application by including other
ornamental share prices and enhancing our app with better UI, so as to make it
more user friendly for the users. We've also planned to include various share
prices of Nifty fifty companies' data and their historical behaviour. Incorporating
blogging features for the traders and the users to share their experiences and
ideas would be the next step. And to reach out to a greater number of
audience, we've planned to launch it as an app in playstore.
Reference
[1] . G. Navin, "Big Data Analytics for Gold Price Forecasting Based on
Decision Tree Algorithm and Support Vector," International Journal of
Science and Research, pp. 2026-2030, 2015.
List of Authors
1. Radhamani V
Assistant Professor, Department of Computing (Decision and
Computing Sciences), Coimbatore Institute of Technology,
Coimbatore, Tamil Nadu, India
Email ID: vradhamani@cit.edu.in Mobile: +919994314741
2. Dr. Manju D
Assistant Professor, Department of Computing (Decision and Computing
Sciences), Coimbatore Institute of Technology, Coimbatore, Tamil Nadu,
India (Corresponding Author) Email ID: manju@cit.edu.in Mobile:
+919865229679
3. Bobby Prathikshana M
M. Sc (Integrated) Decision and Computing Sciences,
Department of Computing, Coimbatore Institute of Technology,
Coimbatore, Tamil Nadu, India
4. Javagar M
M. Sc (Integrated) Decision and Computing Sciences,
Department of Computing, Coimbatore Institute of Technology,
Coimbatore, Tamil Nadu, India
5. Nivetha V
M. Sc (Integrated) Decision and Computing Sciences,
Department of Computing, Coimbatore Institute of Technology,
Coimbatore, Tamil Nadu, India
6. Rinubha P
M. Sc (Integrated) Decision and Computing Sciences,
Department of Computing, Coimbatore Institute of Technology,
Coimbatore, Tamil Nadu, India
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