Covid-19 pandemic, fear index, national culture, and demand for gold: An international analysis

Abstract

This research examines the effects of the fear index and the Covid-19 pandemic on gold demand, using panel data from 24 countries spanning 2010 - 2022. To address statistical concerns, the study applies the Feasible Generalized Least Squares (FGLS) as the baseline estimator. The findings show a positive correlation between gold demand and both the fear index and changes in gold prices, though some countries exhibit a negative relationship with Covid-19 and gold prices. These results highlight the influence of fear and pandemic uncertainty on gold demand across Confucian Asian, Western, Middle Eastern, and Southern Asian regions. Despite global consumption declines during economic instability, gold remained a preferred safe-haven asset in these areas. The study’s insights are valuable to investors, policymakers, and financial market participants seeking to understand gold demand dynamics and develop informed risk-management and investment strategies.