The Impact of falling interest rate and the gold price on investment interest

Abstract

Investment activity has become an important component in supporting economic growth and increasing public financial participation in Indonesia. Changes in macroeconomic variables, particularly declining interest rates and fluctuations in the gold price index, are considered capable of influencing public investment interest. This study aims to analyze the effect of falling interest rates and the gold price index on investment interest in Indonesia during the 2021–2025 period. The study employs a quantitative approach using secondary data obtained from Bank Indonesia, the Indonesia Central Securities Depository (KSEI), and national gold price data. A total of 58 monthly observations were analyzed using multiple linear regression with classical assumption tests consisting of normality, multicollinearity, heteroscedasticity, and autocorrelation tests.

The results show that the interest rate variable has a negative and statistically significant effect on investment interest, with a regression coefficient of −1.2931 and a significance value of 0.000. This finding indicates that lower interest rates tend to encourage the public to shift their funds toward investment instruments with higher potential returns. Meanwhile, the gold price index has a positive but statistically insignificant effect on investment interest, with a coefficient of 0.0000009 and a significance value of 0.1273. The regression model produces an R² value of 0.4191, indicating that 41.91% of the variation in investment interest can be explained by the two independent variables, while the remaining 58.09% is influenced by other factors outside the model. Furthermore, the study found that the model satisfies the multicollinearity and autocorrelation assumptions, although the normality and homoscedasticity assumptions were not fully satisfied. Overall, the findings suggest that declining interest rates play a more dominant role in influencing investment interest than fluctuations in gold prices during the observation period.