Exploring Interactions Between Gold Exchange-Traded Funds and Nifty 50 ETF, Weighted Fund ETF, And Sensex ETF

Abstract

This research sets out to unravel complex dynamics between Gold Exchange-Traded Funds (ETFs) and three critical indices in the Indian financial market, namely Nifty 50 ETF, Weighted Fund ETF, and Sensex ETF. Employing structural equation modeling with ML estimation for over a period of ten years, the study seeks to establish the complex relationship between Gold ETF and the returns of these selected indices.

The estimated negative effects were slight and not significant for Nifty 50 ETF and Weighted Fund ETF while for Sensex ETF the results were positive but insignificant leading to questioning of the presumed diversification advantage of Gold ETFs in these contexts. As such, complementing the existing literature, the study provides additional and more detailed information about Gold ETF, noting the necessity to study its connections with other important ETFs in further detail.