The Role of Gold as a Safe-Haven Asset during Periods of Economic Uncertainty: An Empirical Analysis of Retail Investors

Abstract

Gold has long been viewed as a safe-haven asset due to its capacity to maintain wealth and mitigate investment risks during times of economic instability. Economic disturbances stemming from inflation, geopolitical tensions, currency variations, financial market fluctuations, and global crises have solidified investors' inclination towards gold as a dependable investment option. This research investigates the function of gold as a safe-haven asset from the viewpoint of retail investors by analyzing secondary data sourced from research journals, government publications, financial reports, and institutional studies. The research employs a descriptive design to assess how economic uncertainty influences gold investment behavior and to evaluate investors' preferences among different types of gold investments, such as physical gold, Gold Exchange-Traded Funds (ETFs), Sovereign Gold Bonds (SGBs), and digital gold. The results demonstrate that gold remains an effective hedge against inflation and market volatility while offering benefits for portfolio diversification. Additionally, the study highlights a rising preference among retail investors for Gold ETFs and digital gold, attributed to their convenience, liquidity, and security. Despite the presence of alternative investment options, gold continues to be a vital element of long-term investment portfolios due to its stability in uncertain economic climates. In conclusion, gold maintains a crucial role in wealth preservation and risk management, establishing it as a favored investment choice for retail investors during times of economic turmoil.