Gold Tracker Monitors the Price of Precious Metals and Has

Essay

Gold Tracker monitors the price of precious metals and has developed a forecasting model for the sales of gold: Q = 4,000 − 0.01P + 1.5C − 1.25X + 1.0S, where Q = weekly sales of gold (in millions of ounces), P is the price of gold (dollars per ounce), C is the most recent one-month report of the consumer price index of inflation (in percent), X is an index of the exchange rate of the U.S. dollar compared to seven other currencies, and S is the market price of an ounce of silver (dollars per ounce).
(a) Recently, the price of gold has been $380 per ounce, inflation was measured at 0.2% for the month, the dollar has been trading at 99.7 on the foreign exchange index, and silver has been steady at $9.50 per ounce. What is the expected quantity of gold traded per week?
(b) Forecast sales of gold for the next two weeks if gold’s price is expected to rise by 1% per week, inflation is expected to remain constant, the dollar is expected to fall by 5% per week, and the price of silver is expected to rise by 2% per week.