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Does internet search interest for gold move the gold spot, stock and exchange rate markets? A study from India

Anshul Jain and Pratap Chandra Biswal

Resources Policy, 2019, vol. 61, issue C, 501-507

Abstract: India is the largest importer of gold in the world and it is India's second largest import. Gold is treated as a valuable safe haven commodity by investors in India, indicating the extent of its financialisation. This investment demand for gold drives its imports and hence linkages to the exchange rate and equity markets. Movements in the price of gold drives investor interest for the same, which this study aims to capture through Google Search Trends. This study examines the time varying correlation and nonlinear causality amongst Google Search Trends for gold, gold spot price in India, the Indian stock market index Nifty and the USDINR exchange rate. We find presence of bidirectional causality between gold search trends and gold spot price, along with effects on the equity and exchange rate markets. From these results, this study derives important recommendations for both the central bank (Reserve Bank of India) and investors.

Keywords: Google Search Trends; Gold; Nifty; USDINR; Exchange rate (search for similar items in EconPapers)
Date: 2019
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