Does internet search interest for gold move the gold spot, stock and exchange rate markets? A study from India. (June 2019)

• Record Type: Journal Article
• Authors: Jain, Anshul; Biswal, Pratap Chandra
• Is Part Of: Resources policy. Volume 61(2019)
• Page Start: 501
• Page End: 507
• Publication Date: 2019-06
• Subjects: Google Search Trends -- Gold -- Nifty -- USDINR -- Exchange rate; Mines and mineral resources -- Periodicals; Ressources minérales -- Périodiques; Ressources naturelles -- Gestion -- Périodiques; Environnement -- Politique gouvernementale -- Périodiques; 333.8
• DOI: 10.1016/j.resourpol.2018.04.016
• Languages: English
• ISSNs: 0301-4207

Abstract

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. Highlights: India is the largest importer of gold in the world and it is India's second largest import. Google Search Trends for gold is used as indicator of investor interest in gold. Time varying correlation amongst Google Search Trends for gold, Indian gold prices, Nifty index and USDINR rate explored. Bidirectional asymmetric nonlinear causality observed between gold search trends and gold spot price. Google Search Trends and gold has causal relations with equity index and exchange rate markets.