Reassessing Gold as a Safe Haven Asset Amidst Global Market Turmoil: Insights from the COVID-19 Pandemic

Abstract

There is an immediate need for a re-evaluation of gold as a safe haven for people's money because to the massive problems the markets are presently suffering due to the COVID-19 outbreak, which is wreaking havoc on the global financial system. During the COVID-19 epidemic, researchers are investigating whether or how different volatility indices for different asset classes influence people's demand for gold as a safe haven asset. This study examined the long- and short-term relationships between gold prices, oil price volatility, silver price volatility, and COVID-19 (as measured by the number of deaths due to COVID) using ARDL Bound testing cointegration and a nonlinear ARDL approach to daily time series data from January 2020 to December 2023. The research found that although silver price volatility has a negative effect on gold prices in the near term, oil price volatility and gold price volatility have a positive effect in the long run. However, in the near run, gold prices are affected negatively by all three indications. The usefulness of gold as a haven asset during a catastrophic outbreak is shown by the fact that COVID-19 has both a short- and long-term positive impact. The findings of this study have significant implications and provide guidance to investors on how to safeguard their wealth by taking use of gold's safe-haven status in this era of pandemics.