An empirical study on the relationship between stock market performance and gold prices in India

Abstract

This study investigates the relationship between stock market performance and gold prices in India, aiming to understand the dynamic interplay between these two key financial assets. Utilizing historical data from Indian stock indices and gold prices over a significant period, the study employs econometric methods such as correlation analysis, Granger causality tests, and co-integration techniques. The findings reveal that gold prices and stock market performance exhibit a complex, inverse relationship, particularly during periods of economic uncertainty. The study also explores the role of gold as a hedge against stock market volatility and its significance for Indian investors. Insights from this research contribute to portfolio diversification strategies and offer implications for policymakers and financial market participants in India. The paper finds that gold returns are significantly independent of the returns of the benchmark indices of BSE and NSE.