The safe-haven property of precious metal commodities in the COVID-19 era

This paper examines the presence of short- and long-run asymmetric relationships between precious metal commodities and S&P 500 stock market index and explores the safe-haven role of five precious metals (Aluminum, Platinum, Palladium, Copper, Gold) against the S&P 500 market index. We apply the nonlinear ARDL framework on daily data covering the COVID-19 pandemic period from 12/31/2019 to 06/25/2021. The main results highlight that precious metal commodities still impact the S&P 500 stock market index in an asymmetric manner but have lost their safe-haven role against the S&P 500 index. In the short-run, only aluminum has an asymmetric effect on S&P 500. However, Platinum, palladium, copper and gold have a symmetric effect on S&P 500. In the short-term, palladium, copper and gold are safe-haven assets against the S&P 500 stock market index. Furthermore, none of the considered precious metals acts as a safe-haven asset in the long-run. Our results have significant implications for portfolio investment strategies.

Automated summary

The study reveals that precious metal commodities still impact the S&P 500 stock market index in an asymmetric manner but have lost their safe-haven role. Aluminum has an asymmetric effect on S&P 500 in the short-run, while platinum, palladium, copper, and gold have a symmetric effect on S&P 500. Palladium, copper, and gold act as safe-haven assets against the S&P 500 stock market index in the short-term, but none of them serve as safe-haven assets in the long run.