how major events shape gold futures in the Indian commodity market

What is it about?

This research explores how major global crises and domestic events influence the gold futures market in India. Focusing on the period from 2020 to 2024, the paper analyzes 1,210 daily data points from the Multi Commodity Exchange (MCX India) to measure changes in gold futures prices, returns, and volatility. The study evaluates seven key events that reshaped the global and domestic landscape: The COVID-19 pandemic (first wave) The US Presidential Election The Russia-Ukraine War The G20 Summit The Israel-Hamas Conflict The Ram Mandir Inauguration The 2024 Indian Assembly Elections Using event study methodology and Garman-Klass volatility measurement, the paper examines how quickly and significantly gold futures react to geopolitical tensions, economic shifts, and political milestones.

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Why is it important?

Gold has long been considered a ultimate "safe haven" asset, but how it behaves in an emerging market like India during overlapping, modern disruptions remained largely unexamined. This paper fills that crucial gap by offering empirical proof of gold’s hedging capabilities: Real-World Relevance: It highlights that severe crises—such as the COVID-19 outbreak and international armed conflicts—trigger significant positive abnormal returns, reinforcing gold’s role as a protective buffer during turmoil. Practical Utility for Investors: It equips retail investors, portfolio managers, and bullion traders with clear data to time their entry and exit points, manage portfolio risks, and protect wealth during market shocks. Guidance for Policymakers: It offers central banks and market regulators insights into price discovery and market stability, helping them anticipate systemic risk during global or domestic events.

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