What is Exogenous Shock

This chapter examines the impact of the Covid-19 pandemic on commodity price returns, taking into consideration the role of economic policy uncertainty. Using global monthly data from September 2019 to September 2022, and applying the ARDL model, the study shows that Covid-19 has opposite effects on oil and gold price returns. While oil price returns dropped dramatically, gold continued to rise, serving as a safe asset during this health crisis. Moreover, the results indicate that economic uncertainty has a significant impact on these two commodities, as their importance to the global economy extends beyond their roles as raw materials. Therefore, an uncertain event can affect their stability. These findings can be beneficial to investors and decision-makers, as they should consider turning to gold in times of economic turbulence and uncertainty due to its resistance despite the Covid-19 pandemic.