Gold soars over 4.5 months high owing to THESE REASONS - What analysts suggest investors

As the covid cases continue to wreak havoc in the country, the yellow metal soars as it being the most safe-haven option for the investors. Gold prices on Monday jumped to hover near four and a half months high, supported by a weaker US dollar Index. 

MCX Gold on Monday has been trading over Rs 48500 per 10-gram with rise of Rs 130 or 0.28 per cent increase. Similarly, Spot gold was up 0.2% at $1,883.12 per ounce. Last week, gold prices hit their highest level since January 8, 2021, at $1,889.75 per ounce. 

The growing inflationary pressure, while a decline in cryptocurrencies has also become a reason to lift the most sought out commodity for the investment, experts believe. 

According to DailyFX strategist Margaret Yang, while speaking to Reuters said, "The US dollar index remains relatively weak and the manufacturing and service PMI's from The United States and Europe actually raised the prospect of inflation in months to come.” 

"Recent slide in cryptocurrencies also boosted the appeal of gold as an alternative investment asset. Gold's upward momentum is very strong and it is likely to challenge a key psychological level at $1,900 in the days to come,” Yang added. 

Similarly, Commodity expert Anuj Gupta, last week, has also believed the cryptocurrencies decline to help Gold to rise, as it being the safe-haven investment option for the investors. He expects the precious metal to grow by Rs 50000 per 10-gram in the first quarter of FY22. 

The dollar stood near its lowest levels in three months against the resurgent euro and other European currencies, making gold cheaper for other currency holders.  

Meanwhile, rising in the US inflationary risks have spooked markets after data showed a rise in consumer prices and pick-up in factory activity, lifting gold's appeal as an inflation hedge. 

Also contributing to gold's move, Bitcoin fell by 13 per cent on Sunday, sending it down around 50 per cent from the year's high after Beijing stepped up its efforts to crack down on bitcoin mining and trading, Reuters reported.              

Spot gold looks neutral in a range of $1,875 to $1,893 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.