MODERN EDUCATIONS SOCIETY’S

THE D. G. RUPAREL COLLEGE

OF ARTS, SCIENCE & COMMERCE
SENAPATI BAPAT MARG, MAHIM, MUMBAI 400 016

CERTIFICATE

This is to certify that Miss ESHA JAGDEEP YADAV student of TYBMS

semester VI of the D.G. RUPAREL COLLEGE OF ARTS, SCIENCE &
COMMERCE has successfully completed the project report on “IMPACT ON
GOLD PRICE FLUCTUATIONS ON STOCK MARKET” under the guidance on
Miss SONALI BARE for the academic year 2023-2024

_____________________________ ________________________________
INTERNAL EXAMINER EXTERNAL EXAMINER
(MISS SONALI BARE)

___________________________ __________________________________
DR NEETA TATKE SEAL OF THE COLLEGE
(VICE PRINCIPAL
 DECLARATION BY LEARNER

I the undersigned MISS ESHA YADAV here by declare that the work embodied in this project work
titled “Impact of gold price fluctuations on stock market “ forms my own contribution to the
research work carried out under the guidance of MISS SONALI BARE is a result of my own research
work and has not been previously submitted to any other university for any other Degree /
Diploma to this or any other university .

Wherever reference has been made to previous works of others, it has been clearly indicated as
such and included in the bibliography

I, here by further declare that all information of the document has been obtained and presented in
accordance with academic rules and ethical conduct.

_________________________
MISS ESHA YADAV

CERTIFIED BY

________________________________
MISS SONALI BARE
(PROJECT GUIDE)

DATE ___/____/_______
PLACE: MUMBAI
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth is
so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.

I would like to thank my I/C Principal, Dr. Dilip Maske for providing the necessary facilities
required for completion of this project.

I take this opportunity to thank our Coordinator Dr. Neeta Tatke for her moral support
and guidance.

I would like to express my sincere gratitude towards my Project Guide MISS SONALI BARE
whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books and
magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in
the completion of the project especially my Parents and Peers who supported me
throughout my project.
 EXECUTIVE SUMMARY

Gold has long been considered one of the most precious metals, and its value has been
used as the standard for many currencies (known as the gold standard) in history. Gold
has been used as a symbol for purity, value, royalty, and particularly roles that combine
these properties. Monetary and non-monetary demand for gold is steeply rising. It has
been demanded by individual buyers, institutional buyers as well as the Countries too.
There has been a drastic increase in the prices of gold since 2001. Gold prices have
increased by 900% during the last 10 years. Traditionally gold has been a safe investment
option in India, but its role has changed with the time. Investors can save their money in
a different way, one of the ways is the investment in the shape of the Gold. Different
studies have proved that there is a positive result in the shape of the gold. Many studies
have proved that investment in gold is known as the best way of investment. In the case
of financial crisis, it is known as quite safe. Prior studies showed that there is positive
relationship between gold prices and stock exchange, this thing is showing that gold is
the safe heaven investment. At the start, gold was used as the way of exchange and it
was also used as the nominal purpose. In simple words it is known as the portfolio
investment. Investors have chosen this metal for investment among the different metals.
According to different investors Gold is known as the more profitable metal and less
risky. Different researchers have proved that there is inverse relationship between gold
prices and stock exchange. In the condition of the downturn economy, most of the
investors invest into the gold. The paper focuses and studies various factors that are
attributing towards the increase in its price with special reference to India. The gold
prices in India have shot up more than 900% in past 10 years, and continue to rise. The
results reported in this paper indicate how monetary and non- monetary factors are
contributing towards increase in gold
prices and also how it would affect Indian economy. The purpose of this paper is to
examine the causes, resulting in increase in gold prices. This study also investigates the
effects of international business environment, political environment, market conditions,
its induction in commodity market, buying behavior of consumers, and inflation on gold
prices with special reference to India (between 2010- 2020)
 TABLE OF CONTENTS

Serial Title of Chapters Page

No. No.
1. CHAPTER 1 11

INTRODUCTION

2. CHAPTER 2 14

LITERATURE REVIEW

3. CHAPTER 3 19

RESEARCH METHODOLOGY

3.1. Definition of Research Methodology 19

3.2. Statement of Problem 19

3.3. Statement of Hypotheses 20

3.4. Research Design 21

22
3.4.1. Type of Research
23
3.4.2. Objectives of Research
24
3.4.3. Time Period of Research
25
3.4.4. Sources of Data Collection
25
3.4.5. Universe of Design
25
3.4.6. Sample Size
25
3.4.7. Method of Research
25
3.4.8. Limitations of the Study
25
3.5. Research Instrument

Sydenham college of commerce and economics

 4. CHAPTER 4 26

DATA ANALYSIS AND

INTERPRETATION
5. CHAPTER 5 42

CONCLUSION

6. CHAPTER 6

SUGGESTIONS AND RECOMMENDATIONS 44

APPENDIX 45

BIBLIOGRAPHY 48

Sydenham college of commerce and economics

Impact of gold price fluctuation on stock market

LIST OF TABLES

Sr No. Title of Table Page No.

1. Table 4.1: Gender of the Sample space 26

Table 4.2: Age of the sample space.

2. 27

3. Table 4.3: Occupation of the sample space 29

4. Table 4.4: Individuals knowledge about the 31

stock market

5. Table 4.5: investment in stock market 32

6. Table 4.6: Objective of investment. 33

7. Table 4.7: Pattern of their investment 34

8. Table 4.8: How majorly does pricing affect 36

stock market

9. Table 4.9: Percentage of saving invested in 37

stock market

Sydenham college of commerce and economics

8
10. Table 4.10: Risk involved in investing 38

11. Table 4.11: is it worth investing in stock market 39

12. Table 4.12: Gold investments or stock market 40

investments
 LIST OF CHARTS

Sr. No. Title of Chart Page No.

Chart 4.1: Gender of the sample

1. 27
space

Chart 4.2: Age of the individual

2. 28

3. Chart 4.3: Occupation of the 30

individual

4. Chart 4.4: Knowledge about the 31

stock market

5. Chart 4.5: Investment in stocks 33

6. Chart 4.6: Objective of investment 34

7. Chart 4.7: Pattern of investment 35

8. Chart 4.8: pricing affecting the 36

stock market

9. Chart 4.9 Percentage of risk 38

involved in investing
10. Chart 4.10: risk involved in
investing.
39

11. Chart 4.11: is it worth the risk 40

12. Chart 4.12: Gold investment or 41

stock investment
 CHAPTER 1
INTRODUCTION
1 Definition
Gold is known as a traditional substitute for the stock market. An increase in gold price
might cause the investors to withdraw their money from the stock market, which leads to
a decrease in stock index.

This study is targeting two main variables: Gold and the stock market as they have an
important position within today’s economy and are highly significant assets for investors
in the financial

market. Gold is the sacred precious metal that had a great position during the ancient
times and played an important role in the human society this position can be attributed
to the idea of it being seen as irreplaceable element because of its unique properties. the
gold use started with the manufacturing of precious jewelries which is still a big division
of current gold forms circulated in the economy ;it’s used then moved to be valued
carrier in the barter system all the way to the current money system where it started in
the manufacturing of coinage then countries used it for bills and gold certificate (they
mature at the end into gold coins) in their systems during the 19 th century which helped
emphasizing the gold standard money and then gold standard system during that period
of time. The next step in the journey is the move to Britian wood system where the USA -
and many other countries -nailed their currency and fixed their exchange rates to a
certain amount of gold; when this system ended the USD was set as a free floating
currency – pure flat money – therefore introducing the new fiat currency system after
1976 which represents the current state of economy. Now gold is still considered as a
financial tool that holds the characteristic of a currency and a commodity within the
same time along with its liquidity feature. It’s also still considered an important and
leading asset and commodity in the metal market and industrial sectors as well as a
precious personal property, an investment and saving too , an exchange asset and a
hedging asset against different situations .Therefore this new era for gold is characterized
by it being an important asset and investment tool in the commodity mark; from its
current importance in the financial market, the researchers decided to study its
relationship to the stock market as many other studies focused on it relationship to other
commodities or macroeconomic variables but rare are those studies that did it to the
stock market. When it comes to the stock market, its importance is undoubtedly
unquestionable, in fact it is impossible to imagine a world without a stock market as it
plays a vital role in the economy of any country, and helps towards the growth of the
economy, and can cause a huge negative impact when not watched. The stock market
can be divided into two main segments, primary market and secondary market. The first
stock exchange was established back in 1531 in Belgium. However, they did not trade in
stocks, but traded in bonds and promissory notes. In 1929, the stock market crashed in
September due to insanely large amounts of volumes of trading, which lead to the Great
Depression of 1929. It was the longest and deepest depression the economy has ever
fallen into. This is a great example to demonstrate that governments much keep an eye
on the stock market and be on stand b to intervene only when necessary and not in an
obvious or harsh manner. We live today in an open economy where any and every
investor has access to stock markets internationally; investors now cannot imagine a
world without the stock market. These stocks and their movements are closely related to
and affected by different economy indicators such as inflation, gross domestic product
(GDP), jobless rate, consumer price index, producer price index (PPI), along with other
indicators. Many investors opt to invest in the stock market as well as gold, in order to
minimize or eliminate the systematic risk. It is also considered as an insurance against risk
to invest in gold as well, as in, using gold as a hedging tool. This is because gold is seen as
store of value, while the stock market is only seen as a return of value. These
characteristics of the gold and stock market is what drives the investor’s behavior when
investing in gold or stocks. Hence, it can be concluded that gold tends to have some kind
of a relationship with the stock market that may be affected by different economic
variables. The remainder of the paper is organized as follows. The next section briefly
discusses the previous research and provides background information Hypotheses
development. Then, research methods are discussed and results presented.

1.1ADVANTAGE OF RESEARCH
The main advantage of this research paper is that I discovered to what extent gold
price affects the stock market and this will surely help me invest wisely henceforth
using calculated methods as to predict and judge the market with a diverse
perspective and earn profits with better benefits. In today’s world I as person on
behalf of our generation would agree on the fact that gold investments would reduce
with time and we tend to neglect what a change in their price value could affect our
stock market investments.
 CHAPTER 2

LITERATURE REVIEW

2. Review of Literature
CHEN JIE, QUANDA ZHANG (2014)-
Gold futures are a future contract which chooses the gold as subject, and it is a
standardized protocol that the seller and the buyer agree to deal in a specific time in the
future based on their agreement. In an efficient market, the gold futures market and spot
market, however, will respond to innovation at the same time, and there is no lead-lag
relationship between the two markets. Product design, trading mechanism, and different
investors are the main differences between the gold futures market and spot market.
Because of the great risk when investing in gold futures, many investors prefer gold stock
instead of gold futures to be their first choice. Therefore, it is important to understand
the relationship between the gold futures and gold stocks. For many investors, it is rather
meaningful to predict the trend of the value of listed gold companies and thus make
more accurate price estimate when the trend of the gold futures is analysed and
available

2. CLARK JEFF (2014)

Stocks benefit from economic growth and stability while gold benefits from economic
distress and crisis. If the stock market falls, fear is usually high, and investors typically
seek out the safe haven of gold. If stocks are rocking’ and rolling’, the perceived need for
gold from mainstream investors is low. Historical data backs up this theory of negative
correlation between gold and stocks. This chart shows the correlation of gold to other
common asset classes. The zero line means gold does the opposite of that investment
half of the time. If the line is below zero, gold moves in the opposite direction of that
investment more often than with it; if it’s above zero, it moves with that investment
more often than against it. 2 CLARK JEFF (2014) 1 CHEN JIE, QUANDA ZHANG (2014)

3. DHAWAN SUNIL (2019)

- According to a report by the World Gold Council, annual data from 1990 to 2015,
revealed two significant factors affecting gold consumer demand (jewelry and bar and
coin combined) over the long-term. "All else being equal, gold demand is driven firstly by
income i.e. gold demand is seen to rise with income levels. For a 1 per cent increase in
income per capita gold demand rises by 1 per cent and secondly, gold price level i.e.
higher prices deter gold purchases. For a 1 per cent increase in price. When inflation
rises, the value of currency goes down and therefore people tend to hold money in the
form of gold. Therefore, in times when inflation remains high over a longer period, gold
becomes a tool to hedge against inflationary conditions. This pushes gold prices higher in
the inflationary period.

4. HEDWIG and MALIK (2013)

This research paper stated that there is strong evidence of volatility spillovers between
the gold and stock market. The paper used univariate and bivariate GARCH models to
achieve such results. The relationship between gold and the stock market; most studies
focus more on the role of gold as a hedge or safe haven. There are volatility spillovers
between China’s change in stock prices and gold price, and adding gold in a stock
portfolio can help minimize stock market risk
5. FABER MARC (2015)-.
In his book “TOMORROW’S GOLD: ASIA’S AGE OF DISCOVERY” states his attempts to
discover the outperforming asset classes of the future. The book analyzes the past, spots
the trends, and tries to describe how new trends may develop in future

6. KABRA SWAPNIL (2017)-

The given research paper beautifully explains the relationship between gold and stock
market with an example of apples and oranges which goes like this a farmer had limited
land initially he would grow apples and oranges. After a while the prices of oranges
started falling. The farmer being an entrepreneur reduced the production of oranges to
ensure that he earns more or less the same. This way the farmer is utilizing his limited
land in a better way. This same behavior applies in case of stock market and gold both
EQUITY and GOLD are asset class people invest with a view of earning returns on
investments. When there is a boom in the Stock market Equity as an asset class becomes
more attractive people invest more in the market however when there is a crash in the
market people go with the safer option which is gold to invest. hence there is an inverse
relationship between gold and the stock market which is mainly based on psychological
reasons.

7. MEWATI SUNNY (2014)

This study states that gold is a safe haven asset. Increasing gold prices are a traditional
indicator of a recession or a downturn in an economy. US DOLLAR being the most
important currency in the world today. most of the trade in oil is invoiced in US DOLLAR.
When the country’s economy is doing good or is expected to be good.
8. MISHRA P.K, DAS J.R (2010)
This research paper states that, In India stocks do not seem to be perceived as an
alternative to gold. The reason for holding gold is, to a large extent, guided by the
individual sentiments. The gold investing habits of Indians strongly ingrained in the Indian
Social Psyche. In India gold has been held by individuals for years and have passed hands
of many generations. In addition, the equity culture in India is not as developed as in
some other parts of the world. Gold has not yet lost its prime importance as a hedge
against loss of wealth in times of crise

9. MOREMO, KGOTO and BONGO (2010):

This paper aims to study the impact of gold and oil price fluctuations on the volatility of
the stock market and its component indices or sectors – namely, the financial, industrial
and resource sectors – making use of the asymmetric dynamic conditional correlation
(ADCC) generalized autoregressive conditional Moremo , Kgoto and bong bong(2010) 8
Mishra P.K , Das J.R(2010) 7 Mewati sunny(2014) Impact of gold price fluctuation on
stock market (GARCH) model. Moreover, the study assesses the magnitude of the
optimal portfolio weight, hedge ratio and hedge effectiveness for portfolios that are
constituted of a pair of assets, namely oil-stock and gold stock pairs. The findings of the
study show that there is significant volatility spill over between the gold and the stock
markets, and the oil and stock markets. This finding suggests the importance of the link
between futures commodity markets and the stock markets, which is essential for
portfolio management. With reference to portfolio optimization and the possibility of
hedging when using the pairs of assets under study, the findings suggest the importance
of combining oil and stocks as well as gold and stocks for effective hedging against any
risks
10. MUHAMMAD SHAIQUE, ABDULAZIZ (2016)
The objective of the study is to examine the long-term relationship between gold prices
and KSE-100 index of the Karachi stock market Pakistan. For the foreign and domestic
capital investors, it is assumed that gold is the safest heaven for making investment. On
the other hand, stock markets are considered highly volatile. This study uses monthly
data of two hundred forty-eight months from October 1993 to May 2014. To achieve the
aims of the study, several econometric tests have been applied such as unit root test by
using Augmented Dickey-Fuller test, Johnson Co-integration test and Vector Auto-
regressive Model (VAR). This study finds that there is no long-run relationship between
KSE 100 index and gold prices. It is concluded investors should not consider KSE 100 index
and gold prices as close alternatives rather they should make their decisions on
subjective knowledge by aligning them with empirical evidence. While making decisions
about gold prices last month’s price must be taken into consideration because the
current gold price is significantly influenced by last month’s gold price.

11. SHETTY ADHIL (2019):

This research study tells us about how there might not be a definite relationship between
GOLD and STOCK MARKET, it is commonly observed that the stock market and the gold
movements are inversely proportional to each other. This is because people have the
tendency to treat gold as a safety net against economic factors such as uncertainty and
inflation. When stock markets propel, people tend to invest in equities yet a disturbance
in the economy could push people towards gold as it is perceived to have the 11 Shetty
Adhil (2019) 10 Muhammad shaquie, abdul aziz (2016) Sydenham college of commerce
and economics 17 Impact of gold price fluctuation on stock market best inflation in the
long run. However, despite the proliferating stocks, the gold prices could be on the risk
due to lifestyle trends or certain seasons or festivals.

12. TRIPATHY NALINI PRAVA (2016)

The present research study investigates the integration between gold price and stock
market by using monthly time series data from 1990 to 2016. The study uses unit root
test, correlation test etc. to evaluate their relationship. The study finds that there is no
causal relationship between gold price and stock market price in the short run. However
gold price and stock market are co integrated indicating long run equilibrium relationship
between them and they move together the stock market price can be used to predict the
gold price and vice-versa. The study also recommends that integration between gold and
stock market prices necessitates the need for global investors to follow portfolio stock
selection strategy to add value from investments in India.
 CHAPTER 3
RESEARCH METHODOLOGY
3.1 Definition of Research Methodology Research Methodology is the process used to
collect information and data for the purpose of making business decisions. It refers to the
specific procedures or techniques used to identify, select, process and analyze the
information about a topic. In a research paper the methodology section allows the reader
to critically evaluate a study’s overall validity and reliability. The methodology section
answers the two main questions such as how the data was generated and how it was
analyzed. The main purpose of research methodology is to encourage the spirit of
enquiry and it also fulfills the mandatory requirements prescribed for a particular
research study.

3.2 Formulation of Problem Statement

As it is Stock market is a Risk takers market, the problem we were looking into through
this paper is how and why does gold price affect both positive as well as negative impacts
of it’s on the economy as well as the stock market in the recent 10 years period
3.3 Hypothesis of Study
HYPOTHESIS 1 (H0):
It is observed that gold prices and stock market have an inverse relation, if the Stock
market rises then the gold price see a slight decrease in prices because of the emotional
factor as the stock market is also dependent on the emotions of a buyer and a seller.

HYPOTHESIS 2 (H0):
3.1 According to different investors Gold is known as the
more profitable metal and less risky. Different researchers
have proved that there is an inverse relationship between
gold prices and stock exchange. In the condition of the
downturn economy, most of the investors invest in gold.
 3.2 Research Design

Research design is the framework of research methods and

techniques chosen by a researcher. The design allows researchers
to narrow down on research methods that are suitable for the
subject matter and set up their studies up for success.

3.4.1 Type of Research

a) Pure Research:

Pure Research is also known as fundamental or basic research and

this type of research is not directly associated with problem solving.
It’s main aim is to improve the academic as well as the theoretical
knowledge about the subject matter. Pure research is usually opted
to expand the frontiers of knowledge and it does not deal directly
with the solving of the pragmatic problems.

b) Applied Research:

Applied research is problem-oriented research that directly deals

with commercial problems. It is used to tackle problems occurring in
the business and aims to fins appropriate solutions to these problems.
Applied research is generally divided into two types, problem
solving and problem oriented.

a) Empirical Research:
 Empirical research is a type of research that uses empirical
evidences for gaining knowledge regarding the subject matter by
the means of direct and indirect observations or experiments. In
this type of research, knowledge is derived from actual experiences
and not from theories or beliefs.

b) Scientific Research:

Scientific research is the application of scientific methods for the

investigation of various relationships that exist among neutral phenomena or to
solve a technical/medical problem. Scientific research is fundamental to
modern business as it is research in which questions are posed by the means of
scientific theories and hypothesis.

c) Historical Research:

Historical research is a qualitative technique. Historical research studies the

meaning of past events in an attempt to interpret the facts and explain the
cause of events, and their impact on present events.

d) Exploratory Research:

This type of research is conducted to explore the information that is related to

the nature or causes of the problem. The primary aim and objective of
explanatory research is to define the problem clearly, to develop a hypothesis
and to develop priorities for further research and to identify substitute courses
of section.
 c) Descriptive research:

This type of research helps in acquiring detailed information

about the project. The main purpose is to describe the present
situation with respect to the topic. This research addresses the
who, what, when, where and how factors of a problem.

d) Casual Research:

This type of research brings out the relationship between two or more
variables. For example, the relationship between advertising and sales.

The present study topic is based on Casual, Descriptive and Exploratory

Research.

3.4.2 OBJECTIVE OF RESEARCH

3.4.2.a The main aim of the project was to establish a definite relation
between the stock prices and the gold prices.

3.4.2.b The study was conducted to state the different inter relations
between the stock market and price fluctuations of gold.

3.4.2.c To study an overall concept of the working of the stock market.

 TIME PERIOD OF THE STUDY

This study was conducted over time period of 3 months

3.4.3 METHOD OF RESEARCH

The research was done using random sampling method

3.4.4 UNIVERSE OF DESIGN

The universe of this design includes all the people investing in the stock
market and are actively keeping a track of it.

3.4.5 SAMPLE SIZE

As there is no age limit barrier, the sample size of this study include 20 –
60 years and above all those who keep a track of the market and invest in
it.

3.4.6 LIMITATIONS TO THE STUDY

a) Data collected cannot be taken totally into consideration as many

people don’t keep a regular check on the market

b) No long term trends can be interpreted as the data available is of a

short period

c) The market changes everyday hence a definite conclusion cannot

be obtained as the trend today may not necessarily be true for
tomorrow.
3.4.7 RESEARCH INSTRUMENT

For the given study a Questionnaire is being used as the Research

Instrument for the purpose of collection of data.
3.4.9. Sources of Data Collection

The Data collected for this research is a collection of both

primary data and secondary data.

Primary Data: Primary data is the data that is collected by a

researcher from first hand sources, using methods like surveys,
interviews conducting several types of experiments. The primary
data for this research is collected by Survey Method.

Secondary Data: Secondary data is that data that has been gathered
from various studies, surveys, or experiments that have previously
been conducted by other researchers for the purpose of their own
research. Secondary data helps a researcher understand the basis
physiology of the research that would be conducted in the future.

The Review of Literature in this paper has been created with the
help of secondary data that was gathered from the Internet, various
magazines, gazettes, journals and newspapers.

· Data collection techniques: The primary data to conduct this

study has been collected by the means of a questionnaire and
interviewing 50 adults.
 CHAPTER4

DATA ANALYSIS AND DATA INTERPRETATION

1. Gender of the sample

Table no.1.1

Chart no. 1.1

Out of the 87 respondent’s 54 were men, 27 were females while the other
4 did not respond to the question which tells us that out of the total
66.67%are males and the rest 33.3% are females.

1.Age of the sample

Table no. 2.1

Chart no. 2.1

From the above chart we can infer that most of the sample are of 50 and
above which is 32.5% the next being the young generation which accounts
to 31.3% and the age group here is 20-30 years also a good per cent of
28.9 being the age group of 40- 50 while the rest 7.2 % accounts for age
group of 30-40.
1.Occupation of the sample

Table no. 3.1

Chart no. 3.1

The above chart tells us that the major amount of 36 people is
working in the service sector whereas 15 out of them are self
employed

a total of 21 are students while the other 8 work for the private sector
and the rest 21 are students
1. Knowledge of the sample in stock

market Table no. 4.1

Chart4.1
 The above chart states that most of the sample i.e 62.5% have basic
knowledge about stock market, 28.8% would like to say that they have
fair knowledge about the working of the market while the other 8.8 %
have good information about trading.

2. Investments in

stocks Table no. 5.1

Chart no. 5.
From the above shown chart we infer that 44 out of the 87 do
not invest in stocks and prefer to buy gold instead while the
other 39 actively invest in stocks.

3. Objective of investment

Table no. 6.1

Chart no.6.2
From the above chart we can clearly see that the main objective of
investment is personal growth in the market after which comes safety
followed by income and while the others chose not to answer.

4.Pattern of investment

Table no. 7.1

From the above chart we can infer that 24.4% out of the total feel that
gold prices affect the stock market majorly while 61% think it affects
moderately while the rest 14.6% chose to remain neutral.
Chart no. 7.1

From the above table and chart we can see that 24 out of the
total invest in shares while a good amount of 27 invest in
mutual funds while 15 others resort to buying gold, 13 prefer
have fixed deposits.
 1. Gold price affecting the stock market

Table no. 8.1

Chart no. 8.1

From the above chart we can infer that 24.4% out of the total feel that
gold prices affect the stock market majorly while 61% think it affects
moderately while the rest 14.6% chose to remain neutral.
5. Percentage of savings invested in the market

Table no. 9.1

Chart.no.9.1

From the above chart we can see that 67.5% of the sample
invest approximately 20% of their income savings in stocks
while 4.8% invest more than 40% of their savings while 22.9%
invest 30-40% of their savings.
6. Risk involved in

investing Table no.

10.1

Chart no. 10.1

So we can clearly see that a major amount of 73 people think

that it is risky to invest while the other 10 think that it is not
which is 12.05 % out of the total that think it is not risky while
the rest it is.

7. Is it worth the risk

Table no. 11.1

Chart no. 11.1

A good amount of 62 or 75.61 % of the total think it is worth the

risk, the rest 24.39 % or 20 of the others that it is not worth the
risk.

8. Gold or Stock market

Table no. 12.1

Chart no. 12. 1

A major portion of the sample would not prefer investing in

stocks which comes to a total of 61.7% while the rest which
accounts to 50 people or 38.3% prefer buying gold.
Gold price in India for next five years
For thousands of years, gold has been recognized as a valuable item, and it has
always been people’s greatest desire. Still the market has developed significantly in
recent years, and investing in it has become a common need.

The gold price is currently in a strong position, having reached a new all time high.
While no one can foresee gold prices, based on past performances, gold prices in
the next five years are likely to increase for a long time. In the current market
environment, gold’s position is stable in terms of mobility. The growth or decrease
in a dollar value is used to calculate and recognize it. The uncertain market
contributed to the surge in value throughout the pandemic and continues to do so.

The uniqueness of gold makes it such a precious item. However, the price of gold is
influenced by many factors. The price swings result from these factors, causing
customers to consider investing, purchasing, or selling. Because of the expectations
that the rate will rise faster, more individuals are investing in gold. As a result, if
the buyer makes a sensible judgement, they can buy gold at the current price and
sell it later for a profit. However, it’s important to keep in mind that price
fluctuations might occur without warning. It means that buyers and traders must be
especially aware of the same.
Year Price (24 karat per 10 grams)

1964 Rs.63.25

1965 Rs.71.75

1966 Rs.83.75

1967 Rs.102.50

1968 Rs.162.00

1969 Rs.176.00

1970 Rs.184.00

1971 Rs.193.00

1972 Rs.202.00

1973 Rs.278.50

1974 Rs.506.00

1975 Rs.540.00

1976 Rs.432.00

1977 Rs.486.00

1978 Rs.685.00

1979 Rs.937.00

1980 Rs.1,330.00

1981 Rs.1670.00
1982 Rs.1,645.00

1983 Rs.1,800.00

1984 Rs.1,970.00

1985 Rs.2,130.00

1986 Rs.2,140.00

1987 Rs.2,570.00

1988 Rs.3,130.00

1989 Rs.3,140.00

1990 Rs.3,200.00

1991 Rs.3,466.00

1992 Rs.4,334.00

1993 Rs.4,140.00

1994 Rs.4,598.00

1995 Rs.4,680.00

1996 Rs.5,160.00

1997 Rs.4,725.00

1998 Rs.4,045.00

1999 Rs.4,234.00

2000 Rs.4,400.00

2001 Rs.4,300.00
2002 Rs.4,990.00

2003 Rs.5,600.00

2004 Rs.5,850.00

2005 Rs.7,000.00

2007 Rs.10,800.00

2008 Rs.12,500.00

2009 Rs.14,500.00

2010 Rs.18,500.00

2011 Rs.26,400.00

2012 Rs.31,050.00

2013 Rs.29,600.00

2014 Rs.28,006.50

2015 Rs.26,343.50

2016 Rs.28,623.50

2017 Rs.29,667.50

2018 Rs.31,438.00

2019 Rs.35,220.00

2020 Rs.48,651.00

2021 Rs.48,720.00

2022 Rs.52,670.00
2023 Rs.65,330.00

2024 (Till Today) Rs. 67,295.00

The impact of gold price fluctuations on the Indian stock market is a

complex issue with no definitive answer. There's evidence to suggest both a
connection and a lack of one. Here's a breakdown of the two schools of
thought:

Potential Connection:
Safe Haven: During economic uncertainty or stock market downturns,
investors might flock to gold, a perceived safe haven, causing its price to
rise. This could lead to money flowing out of equities and potentially
impacting stock prices.

Long-Term Relationship: Some studies suggest a long-term equilibrium

relationship between gold and stock prices. In simpler terms, they might
move in opposite directions over the long haul.
Limited Impact:
Short-Term Fluctuations: Other studies downplay the connection,
suggesting short-term fluctuations in gold prices may not significantly affect
the stock market.

Multiple Factors: Stock prices are influenced by a multitude of factors like

company performance, interest rates, and global events. Gold price
fluctuations might be just one piece of a larger puzzle.

Overall:
The relationship between gold prices and the Indian stock market is likely
nuanced and depends on the specific context.

Long-term trends might show some connection, while short-term

movements might have a lesser impact.

For a more informed view, consider researching these factors that affect
both gold and stock prices:

Interest Rates: Generally, lower interest rates make gold more attractive
compared to fixed-income investments, potentially pushing its price up.

Global Events: Geopolitical tensions or economic crises can trigger a flight

to safety, driving gold prices higher and potentially impacting stock
markets.

Rupee-Dollar Exchange Rate: Since India imports a significant amount of

gold, the rupee's value against the dollar influences import costs and
ultimately gold prices.
By understanding these factors and how they interact, you can get a better
sense of how gold price fluctuations might influence the Indian stock
market.

The impact of gold price fluctuation on the stock market in India can be
multifaceted and depends on various factors including investor sentiment,
economic conditions, and the reasons behind the gold price movements.
Here are some ways in which gold price fluctuations can affect the Indian
stock market:

Inverse Relationship with Gold: Historically, there has been an inverse

relationship between gold prices and stock markets. When gold prices rise,
investors often shift their investments from stocks to gold, considering it a
safe-haven asset during times of economic uncertainty or inflationary
pressures. Conversely, when gold prices fall, investors may move funds
back into stocks, leading to a rise in stock prices.

Impact on Investor Sentiment: Sharp movements in gold prices can

influence investor sentiment. A significant increase in gold prices may
signal concerns about economic stability, geopolitical tensions, or inflation,
leading investors to become more risk-averse and pull out funds from the
stock market. Conversely, a decline in gold prices might boost investor
confidence and encourage more investment in equities.

Sectoral Effects: Gold price fluctuations can have sector-specific impacts

on the Indian stock market. For instance, industries such as jewelry, mining,
and banking are directly influenced by changes in gold prices. A rise in gold
prices may benefit gold mining companies but could negatively affect
industries reliant on gold as a raw material, like jewelry makers. On the
other hand, a decrease in gold prices might benefit sectors that use gold as
an input or hedge against it.

Currency Movements: Gold prices are often influenced by currency

movements, especially the US dollar. In India, where gold is largely
imported, a stronger US dollar typically leads to higher gold prices in rupee
terms. This can impact the Indian stock market through its effects on
inflation, trade balances, and overall economic conditions.

Macro-economic Indicators: Gold price fluctuations can sometimes serve

as indicators of broader economic trends. For example, a sustained increase
in gold prices may signal concerns about inflation or currency depreciation,
which could affect interest rates and overall market conditions. Similarly, a
significant drop in gold prices may reflect improving economic outlooks,
leading to positive sentiment in the stock market.

Global Market Dynamics: Since gold is a globally traded commodity, its

prices are influenced by international factors such as geopolitical tensions,
central bank policies, and demand-supply dynamics. Fluctuations in global
gold prices can spill over into the Indian stock market, particularly in times
of heightened global uncertainty.

Overall, while gold price fluctuations can impact the Indian stock market,
the extent and direction of this impact depend on a variety of factors and the
prevailing economic and market conditions at any given time. Investors
should carefully analyze these factors and diversify their portfolios to
mitigate risks associated with such fluctuations.

While gold price fluctuations can have some benefits for the stock market in
India, such as providing diversification opportunities, they also come with
several disadvantages:

Volatility: Sharp and unpredictable fluctuations in gold prices can introduce

volatility into the stock market. Sudden swings in gold prices may lead to
increased uncertainty among investors, causing panic selling or irrational
buying behavior in the stock market.

Risk of Losses: Investors who are heavily exposed to gold-related assets or

sectors may face significant losses during periods of adverse gold price
movements. This risk is particularly pertinent for companies involved in
gold mining, jewelry, or other industries directly impacted by gold prices.

Portfolio Imbalance: Excessive focus on gold-related investments can lead

to portfolio imbalance, reducing diversification benefits. If a large portion of
an investor's portfolio is tied up in gold assets, they may miss out on
potential gains from other asset classes that perform well during periods of
economic growth or market expansion.
Impact on Import Costs: India is a major importer of gold, and
fluctuations in gold prices can have significant implications for the country's
trade balance and foreign exchange reserves. A sustained increase in gold
prices may lead to higher import costs, negatively affecting the economy
and potentially leading to currency depreciation.

Inflationary Pressures: While gold is often considered a hedge against

inflation, excessive fluctuations in gold prices can contribute to inflationary
pressures in the economy. This can impact consumer purchasing power,
corporate profitability, and overall economic stability, which in turn may
have adverse effects on the stock market.

Deterioration of Investor Confidence: Persistent or extreme fluctuations

in gold prices can erode investor confidence in the broader financial
markets. If investors perceive gold price movements as indicative of
underlying economic weakness or instability, it may lead to a loss of trust in
other asset classes, including stocks.

Policy Uncertainty: Government policies related to gold import duties,

taxation, and regulations can exacerbate the impact of gold price
fluctuations on the stock market. Uncertainty surrounding future policy
decisions may create additional challenges for investors and businesses
operating in gold-related sectors.

Overall, while gold price fluctuations can present opportunities for

investors, they also pose significant risks and challenges for the stock
market in India. It's crucial for investors to carefully manage their exposure
to gold assets and consider the broader economic and market dynamics
when making investment decisions.

Asset to Indian citizens of gold price fluctuations on stock market:

Gold price fluctuations can have both positive and negative effects on the
Indian audience in the stock market. Here are some ways in which gold
price fluctuations can potentially benefit Indian investors:

Diversification: Gold often exhibits low correlation with other asset classes
such as stocks. When gold prices fluctuate, it can provide opportunities for
investors to diversify their portfolios and reduce overall risk. Holding a mix
of gold and stocks can help investors mitigate losses during periods of stock
market volatility.

Safe-Haven Asset: Gold is widely regarded as a safe-haven asset,

particularly during times of economic uncertainty or geopolitical tension.
When gold prices rise, investors may allocate more funds to gold-related
assets as a hedge against market volatility and potential losses in stocks.

Sectoral Opportunities: Gold price fluctuations can create investment

opportunities in sectors related to gold mining, jewelry, and other industries
tied to the gold market. For example, a rise in gold prices may benefit gold
 mining companies listed on the stock exchange, potentially leading to higher
returns for investors in these stocks.

Inflation Hedge: Gold is often seen as a hedge against inflation. When

inflationary pressures rise, gold prices tend to increase, preserving the
purchasing power of investors' portfolios. This can be beneficial for Indian
investors who are concerned about the impact of inflation on their
investments in stocks and other assets.

Trading Opportunities: Active traders may capitalize on short-term fluctuations

in gold prices to generate profits through trading strategies such as arbitrage,
momentum trading, or technical analysis. Volatility in gold prices can create
opportunities for traders to buy low and sell high, thereby enhancing their returns in
the stock market.

Global Economic Indicators: Gold price movements can serve as

indicators of broader economic trends and market sentiment. By closely
monitoring gold prices, Indian investors can gain insights into factors such
as inflation expectations, currency movements, and geopolitical risks, which
can inform their investment decisions in both domestic and international
stocks.

Overall, while gold price fluctuations can introduce volatility and risks into
the stock market, they also offer opportunities for Indian investors to
diversify their portfolios, hedge against market uncertainties, and capitalize
on sectoral trends and trading opportunities. It's essential for investors to
carefully assess their risk tolerance and investment objectives when
incorporating gold-related assets into their portfolios.
 CHAPTER 5

CONCLUSION

The research findings showed that there could be a relationship

between the two variables HDAX Index and Gold, as there was a
long run relationship (Co-integration) between the variables
during the four different periods (he whole period, pre, during
and post financial crisis). Besides that, there is a correlation
between the variables whether it be negative or positive. This
correlation however, was extremely affected by the financial
crisis as the time series pre to the financial crisis had a very
strong positive correlation which means that HDAX Index and
Gold movements are alike. While during the financial crisis, the
positive correlation became weak and low which was not
significant, until finally, post financial crisis, the positive
correlation that occur before the financial crisis between HDAX
Index and Gold became the opposite which is a strong, high
negative correlation. Thus, we can conclude that the financial
crisis did affect the correlation between the two variables but
they maintained their co-integration or long run relationship
through the market shock, the financial crisis. Another important
result of this study are the Granger causality test findings. The
results showed that HDAX Index is not a reason that affects Gold
and also Gold is not a reason that affects HDAX Index. Therefore,
it can be said that HDAX Index and Gold do have a link that can
be addressed or considered in order to get the most benefit out
of it. There is a positive correlation between stock returns and
gold price from 2002 to 2007 but due to economic crisis in USA in
2008 and 2011 this correlation seems to be

fading and it was establish by using correlation and Johansen's

cointegration test that there is no relation between gold prices
and stock

returns i.e Sensex return in the long run period. The results of
Granger causality test reveal that returns of Sensex index does
not lead to increase in gold price and rise in gold price does not
lead to increase in Sensex. In this paper, we provide evidence on
the long-term as well as the short-run relation between gold
price and stock return. Contrary to many previous studies, we
employ Johansen's cointegration and Granger causality based on
VAR framework along with impulse response function, using
data for India on monthly time series data for the period from
January 2001 to December 2017. It is observed that the
cointegration relationship exists between gold price and stock
return. The Johansen’s cointegration approach suggests that
there is a long-run relationship between gold and stock return
and the results of Granger causality approach suggest that there
is no short-run relationship between gold price and stock return
and the VAR computation suggest that gold is a safe option for
investors in the Indian stock market. Based on these results, it
can be concluded that the international gold price has significant
information to forecast stock prices in India.
 CHAPTER 6

SUGGESTIONS AND RECOMMENDATIONS

One main direction to take into consideration may be to

conduct explanatory studies as this study is exploratory in
nature. This can be done on “why” gold and HDAX Index do not
affect each other although they have a long run relationship, or
the endogenous variables that affect the two variables together
causing them to have a long run relationship.

• Another direction may be to study different time periods,

such as historical data prices.

• An alternative suggestion in another part of the world, besides

the Euro zone where no such studies were conducted to help
create a larger picture of the relationship between those
variables and fill the gap of knowledge such as Asian, African or
Scandinavian countries.

• Another alternative direction can also be to conduct a study in

order to examine the relationship between different stock
exchanges in different regions, including short- and long-term
relationship. All of the above suggestions could also include
studying the macroeconomic variables and the microeconomic
variables and factor and their connection and effect on the
relationship between gold price and stock market together;
such as the macroeconomic variables like the inflation, jobless
rate, non-farm payrolls rate, exchange rate, and other factors.