Impact of policy uncertainty on gold price in India: evidence from multi commodity exchange (MCX) India and World Gold Council prices

India is one of the largest consumers of gold but remains largely unexplored and requires proper attention from investors, regulators and policymakers. Our study aims to uncover the relationship between policy uncertainty and gold prices in India, considering a timeline from 2004 to 2023. Using India EPU and geopolitical uncertainty-related index, the empirical estimation was performed in a time series framework using standard OLS and augmented regression using data from MCX-India and WGC prices. Our statistical investigation signals that policy uncertainty and gold prices in India are positively associated. This implies a higher degree of policy uncertainty and a higher gold price. Monetary policy uncertainty and interest rate changes shows an asymmetric impact on the gold price in India; the effects were more pronounced after 2015. Furthermore, policy uncertainty contains information explaining gold futures prices and has a two-month lag impact. Thus, gold trading in India is sensitive to the economic outlook of the economy and policy uncertainty. Gold imports in India have an adverse effect on gold prices. It is also reported that the INR/USD exchange rate plays a vital role in gold price setting. Hence, the study suggest that India’s government should develop a healthy gold ecosystem and gold-policy.