Is Gold a Hedge or a Safe-Haven Asset in the COVID–19 Crisis.

Abstract

The COVID-19 epidemic has pushed the whole economy into chaos, particularly the financial sector. The pandemic's impact has been devastating, resulting in massive health and financial issues. This article investigates the significance of gold as a hedge or safe-haven asset against different external shocks as a result of the COVID-19 pandemic crises. The influence of COVID-19 on the Pakistani stock market was investigated. Regression tests and coefficient causality tests were performed to examine daily data of variables from January 1, 2001 to January 25, 2022. According to the study's empirical results, an increase in COVID-19 instances has historically had a negative influence on the Pakistani stock market, but COVID-19 is favourably connected with gold prices. This paper offers a variety of policy recommendations to help investors, governments, and decision-makers make wise financial decisions for Pakistan, including the recommendation that portfolio investors increase their gold investments during COVID-19.