Post-Covid Dynamics: An Empirical Analysis of Correlation Between Gold Prices and Indian Stock Market Indices

Abstract

The COVID-19 pandemic has greatly influenced international commerce, including the stock market in India as well as commodity markets such as gold. Although gold has always been considered a safe-haven option during uncertain times, investors have faced both advantages and challenges with gold during the Covid period. In this paper, we study the interaction between the price of gold and the performance of benchmark indices in the Indian stock market post COVID-19 using empirical methods. Econometric tools such as ADF for testing stationarity, correlation, and Granger causality tests are employed on time series data from 2020 to 2024 for analyzing the relationship between gold and the key index Nifty 50. The results show a complicated relationship between gold prices and Nifty 50 returns post COVID-19. Gold price relations with stock indices have clearly changed due to government actions, inflationary trends, and changes in investors' psychology, while gold continues to be a safe-haven asset during periods of uncertainty in the market. The study also obtains additional information regarding how such macroeconomic variables as interest rates, inflation, and world commodity prices can affect this situation. This study adds to the body of literature available relating to the reactions of financial markets during international crises while providing empirical evidence related to India specifically. This also helps investors and legislators and financial analysts overcome the complexities of the finance field after the COVID pandemic crisis.