Impact of Gold Price on India Stock Market – An Empirical Study

Abstract

The impact of the increase in international gold prices is reflected in its domestic prices as well.
Although, in India, the recent price rise, demand for gold has sustained, not only as a part of safe
investments but as well due to its societal and cultural significance. Therefore, gold price movements
in India are of excited interest to every section of the people who wants to invest. Gold price rise are a
good indicator of how healthy the Indian economy is. Investors congregate towards gold when they
are defending their investments from either a crisis or inflation and when the price of gold falls which
generally means the market is strong and healthy because investors have gone to gold for other, more
profitable investments i.e. stocks, bonds, real estate business and other investments. From the strategy
point of view, increase of gold prices has raised a concern as to whether a coming fall in gold prices
would have economic stability inferences. The study has been carried out by taking 5 years data into
consideration to determine the impact of gold price on stock price indices.