Impact of Monetary Policy Surprises on Silver Prices in India: An Event Study Analysis: 26066
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https://doi.org/10.35716/IJED-26066
Author: Sarishma Sharma, Mohit Gupta, and Sukhmani
Author Address: School of Business Studies, Punjab Agricultural University, Ludhiana-141004 (Punjab)
Abstract
The results showed a clear asymmetry
in silver price responses to monetary policy changes. Repo rate hikes led to
persistently negative and statistically significant CAARs from t+9 to t+20,
including the event day, indicating sustained downward pressure under
contractionary policy. In contrast, rate cuts produced no significant abnormal
returns, suggesting that expansionary policy does not meaningfully affect
silver prices. During the status quo, CAARs remained negative and significant
from t+4 to t+17, reflecting a prolonged bearish trend driven by unmet market
expectations. AARs were insignificant across all windows and policy scenarios,
implying that adjustments occur cumulatively rather than through daily shocks.
Overall, the findings indicate that investors should be cautious during
tightening cycles, as rate hikes consistently precede extended declines in
silver prices.
Keywords
Average abnormal returns, cumulative
average abnormal returns, event window, monetary policy, repo rate, silver
prices.
JEL Codes
E52, G12, G14.