INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,

MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)

ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025

www.ijltemas.in Page 146

The Relationship Between Gold Prices and Stock Market

Performance: Evidence from Emerging Economies

*

1

Dr K Lakshmana Rao

5

Dr SVGVA Prasad

1,3,4,5

Abstract: This study investigates the relationship between gold prices and stock market performance in India and other emerging

markets (Brazil, China, South Africa), focusing on gold’s role as a safe-haven asset during economic crises. Employing a mixed-

methods approach, we combine quantitative time-series analysis (2000–2025) with qualitative insights from investor surveys.

Econometric models, including Vector Autoregression (VAR), Granger Causality tests, and predictive machine learning models,

were applied to examine interdependencies between stock market indices (e.g., BSE Sensex, NSE Nifty 50, and international

indices) and gold prices. The study also explores the impact of digital gold investments, technological advancements, and

macroeconomic factors (interest rates, currency fluctuations, geopolitical events) on traditional gold investment behaviours.

Findings confirm gold’s role as a hedge during financial crises (e.g., 2008 global financial crisis, COVID-19 pandemic), though its

effectiveness varies across markets and conditions. Predictive models offer practical tools for forecasting gold price movements,

benefiting investors and policymakers in volatile markets.

It also investigates the impact of digital gold investments, technological advancements, and macroeconomic factors (interest rates,

currency fluctuations, geopolitical events) on investment behaviours. A mixed-methods approach, combining quantitative

econometric analysis with qualitative investor surveys, enhances the study’s depth. The findings aim to provide actionable insights

for investors, policymakers, and financial analysts managing portfolio risks in volatile markets.

Background of the Study

Gold has historically served as a store of value, particularly during economic uncertainty, while stock markets reflect broader

economic performance. In emerging markets, gold’s cultural and economic roles amplify its importance, and the rise of digital gold

platforms (e.g., Gold ETFs, Sovereign Gold Bonds) has transformed investment behaviours. Macroeconomic factors, such as

interest rates, currency fluctuations, and geopolitical events, further influence gold-stock dynamics. This study explores these

factors and the role of technology in shaping investment decisions.

1. To examine the historical relationship between gold prices and stock market performance in India and other emerging markets

(Brazil, China, South Africa).

2. To determine whether gold acts as a hedge, safe haven, or diversifier during market turbulence.

3. To analyze the impact of digital gold investments and technological advancements on traditional gold investment behaviours.

4. To investigate the role of macroeconomic factors (interest rates, currency fluctuations, geopolitical events) in shaping the gold-

stock relationship.

5. To develop predictive models for forecasting gold price movements relative to stock market performance.

INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,

MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)

ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025

www.ijltemas.in Page 147

Significance of the Study: This study provides insights for investors and policymakers in emerging markets, enabling optimized

asset allocation and risk mitigation strategies. It contributes to academic literature by addressing the gold-stock relationship in a

broader context, incorporating digital innovations and macroeconomic influences. The predictive models offer practical tools for

III. Literature Review

International Studies

Baur & Lucey (2010) analysed gold’s role as a hedge and safe haven in both developed and emerging markets. They found that

while gold is widely considered a safe haven in developed economies, its effectiveness in emerging markets like India is less

consistent, with investor behaviour playing a significant role.

Jain & Ghosh (2019) discussed gold’s mixed hedging potential in emerging markets. Their findings suggest that while gold can

act as a protective asset during some periods, its role is not consistent, highlighting the need for market-specific studies, such as the

Indian case.

Beckmann & Czudaj (2013) investigated gold’s ability to hedge against inflation in different economies. They found that its

effectiveness as an inflation hedge varies significantly across regions and timeframes. While gold provides protection in some cases,

study suggests that investors shift to gold as a protective asset when stock markets decline. This reinforces gold’s role as a safe

haven in India. The findings align with global patterns observed in financial crises.

Patel & Shah (2013) analysed macroeconomic factors affecting gold prices in India, focusing on inflation. Their research found a

strong link between inflation and rising gold prices, highlighting gold’s role as a hedge. The study confirms that Indian investors

turn to gold during inflationary periods. This underscores gold’s importance in managing financial risks.

Mishra (2016) found that gold acts as a safe haven during times of economic uncertainty in India, particularly during financial

crises like 2008 and 2020, reinforcing its value as a portfolio diversifier in emerging markets.

Kumar & Pandey (2019) investigated volatility spillovers between gold and the Indian stock market. Their study found that

fluctuations in one market impact the other, indicating interconnected risks. This highlights gold’s dynamic role in financial stability.

Their findings contribute to understanding market linkages in India.

secondary time-series data (2000–2025) from financial sources (e.g., Reserve Bank of India, BSE, NSE, World Gold Council,

Brazilian B3, Chinese SSE, South African JSE). Econometric models (VAR, Granger Causality) and machine learning techniques

(e.g., ARIMA, LSTM) analyze gold prices, stock indices, and macroeconomic variables (interest rates, exchange rates, geopolitical

event indices). Qualitative data from investor surveys (n=200) in India, Brazil, China, and South Africa provide insights into

investment behaviours and perceptions of digital gold. Statistical tools (correlation analysis, regression, predictive modelling) and

qualitative thematic analysis ensure robust findings.

Data Analysis Tools

Quantitative: Time-series analysis, VAR, Granger Causality, ARIMA, LSTM (Python, R).

Qualitative: Thematic analysis of survey responses (NVivo).

INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,

MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)

ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025

www.ijltemas.in Page 148

Data Sources: RBI, BSE, NSE, B3, SSE, JSE, World Gold Council, IMF, Bloomberg.

Data Analysis and Results

China: Gold prices (CNY/oz), SSE Composite.

South Africa: Gold prices (ZAR/oz), JSE FTSE.

Macroeconomic Variables: Interest rates (central bank rates), exchange rates (USD vs. local currencies), geopolitical risk index

(GPR).

The following table presents the annual average gold prices and Stock Market values over the study period:

Source: World Gold Council (www.gold.org)

The table illustrates the trends in gold prices (per 10g) and major stock indices across India, Brazil, China, and South Africa from

2000 to 2025, reflecting the interplay between commodity markets and equity performance. Over this period, gold prices in all four

countries exhibit significant growth, with India seeing the highest increase from ₹4,400 in 2000 to ₹85,060 in 2025 (a ~19-fold

rise), followed by South Africa (21-fold), China (7.8-fold), and Brazil (9.1-fold). This surge in gold prices, particularly post-2008,

suggests a global shift toward safe-haven assets amid economic uncertainties, inflation, and currency fluctuations. Conversely, stock

Relationship Between Gold Prices and Stock Indices

To analyze the relationship between gold prices and stock market indices, we can consider their behaviour during key periods:

(e.g., China's SSE Composite declined). This suggests gold acted as a safe-haven asset during periods of market uncertainty.

increased liquidity, and investor confidence in both assets.

stabilization in global markets or reduced speculative activity.

Trend Analysis

Gold Prices: Consistent upward trends across all markets, with spikes during crises (2008, 2020).

Stock Markets: Growth with volatility, e.g., Sensex rose from 5,000 (2000) to 65,000 (2025).

INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,

MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)

ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025

www.ijltemas.in Page 149

Digital Gold: Survey data indicate 60% of investors in India and China use digital gold platforms, compared to 40% in Brazil and

South Africa.

Correlation Analysis

ARIMA: Forecasted gold price trends with 85% accuracy for short-term predictions (1–3 months).

LSTM: Achieved 90% accuracy for 6-month forecasts, incorporating stock indices and macroeconomic variables.

Suggestions

INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,

MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)

ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025

www.ijltemas.in Page 150

63–71. https://doi.org/10.1016/j.jbef.2016.03.002

and Development, 9(2), 47–58.