LEE Euikyung Daejin University

This study is on the relationship between metal prices and financial variables. The metal prices in this study include precious(or noble) metal prices and nonferrous metal prices. The precious metal consists of gold and silver. The LME(London Metal Exchange) index is used for the nonferrous metal price. The financial variables of this study are classified by stock return, interest rate, foreign exchange rate(KR\/US$). This research results show that interest rate and foreign exchange rate are closely related with the precious metal prices but not with the nonferrous metal price. It is interesting that interest rate and foreign exchange rate are positively related with gold price and negatively related with the silver price, which is statistically significant. In the case of stock return vice versa. Even though the results of this study were found in the case of Korea the implication can be extended in other countries and they can be useful in government’s policy making and investors’ financial decision making.