Commodity Price Dynamics and COVID-19: Evidence from the Oil and Gold Markets

Abstract

This research intends to examine how commodity price fluctuations are related to the COVID-19 issue. The research goals were accomplished using the VAR (Vector Autoregressive) model; we examine the dynamics of the oil and gold prices from 2019 to 2021. The Study found a strong correlation between gold and value of stocks and the cost of oil across all Asian stock markets. The study's findings indicated symmetric structures. The strength of the bond usually improves as the communication frequency increases. The period with the lowest frequency contribution was the most significant for the overall relationship. Stocks in Asia react to changes in the price of oil and gold. These findings may be used to maintain a chain reaction when economic situations are unstable. Platinum's liability to oil spillover instability impact is mild compared to other precious metals. Moreover, the null hypothesis of no instability transfer from gold and silver to oil is rejected at various times, painting a different picture from the findings of the time-varying causality-in-variance test. Even more intriguing, we discover that the interaction between oil and silver is a sequential feedback loop. Finally, around the turn of the millennium, the volatility spillover impact from the oil market to the metals markets appears to have been particularly strong. The study's policy implications helped stakeholders make better choices. The relationship between the Indian and Chinese foreign exchange markets and the oil price for energy has historically floated near zero.