Alternative Investments

Should you buy gold amid concerns over Covid variant Omicron?

Should you buy gold amid concerns over Covid variant Omicron?

Should you buy gold amid concerns over Covid variant Omicron?&nbsp

New Delhi: Gold prices touched 5-month highs in November flirting with the $1900 level in the international market amid growing unease that inflation will slow the economy and sabotage the stock market rally. However, in a dramatic reversal, the yellow metal temporarily retreated below the $1800 level as the dollar strengthened and ended the month at $1774.5 an ounce. Meanwhile, the Indian rupee depreciated by 0.4% in November, supporting domestic prices of the yellow metal. 

“The emergence of the Omicron variant has started impacting the economy to what earlier was assumed to be a post-Covid world and is seen clearly putting support for gold while other asset markets see some money taken off the table to assess the real impact,” said Chirag Mehta, Sr. Fund Manager-Alternative Investments, Quantum Mutual Fund.

In the domestic market on MCX, Gold futures for December expiry were up 0.43% at Rs 47,783 per 10 gram on Thursday. Analysts say outlook for the precious metal is already bullish as rising global inflation, dovish stance of the US Fed on interest rate hike and depreciating rupee against the US Dollar (USD) are already supporting the yellow metal. They expect sharp rise in the yellow metal price and advise investors to buy the precious metal for short term gains.

Amit Sajeja of Motilal Oswal said that gold price has strong support at $1760 per ounce and currently it is oscillating around $1780 to $1790 per ounce levels. So, risk-reward ratio for gold is around 1:3, which is very attractive. One should buy gold at current levels for immediate short term target of $1880 per ounce. He said that in next two to three months, gold price in the international market may surge up to $1915 per ounce levels.

Analysts say on MCX, one can buy gold at around Rs 47,500 to Rs 47,700 per 10 gm levels for the immediate short term target of Rs 48,700 with stop loss at Rs 46,900 levels. Experts say gold can touch levels of Rs 49,700 in next one month. 

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