Precious metals as a safe haven asset in the Islamic stock market

With the recent economic downturns exhibited as a result of the Covid pandemic, this research is developed through the motivation of investment tools that are resistant to negative effects brought about by changes in the economy. This brings out the current research being performed on whether precious metals can act as safe-haven assets in the Islamic stock market through the investigations using Granger causality, Impulse response analysis, stationarity testing as well as exploration of the Vector Autoregressive models to observe and outline the relationship between the precious metals and the Islamic stock indices. Using a substantial dataset that ranges from 1997-2023, the research uses stationary testing to ascertain whether the model is fit to be analysed using the impulse response method. The main concentration however of course would be on the impulse response method as that method tells us the direction of the relationship as opposed to the granger causality approach that outlines whether the relationship is present. The results suggest that there are causal relationships exhibited between majority of the precious metals and the Islamic stock indices through the use of the Granger causality method. There are some exceptions due to other factors that can affect the relationship such as uncertainty of the length of the pandemic among others. More notably, the impulse response function develops the notion that the precious metals have exhibited safe-haven attributes in the short run during the considered Coronavirus pandemic however overall, a positive relationship was observed during the time period of the dataset.