As equities soar to screaming highs, is it time to turn to gold?

"Gold is a good asset to add in a staggered manner over the next six months. Equity valuations are running high and inflation is picking up globally. This is usually a good scenario for gold," Sandip Sabharwal, an independent adviser and market expert, told CNBCTV18.com.

Covid waves have impacted the economy but not asset prices as such, and that's why making a prediction based on a third wave "which might or might not happen makes no sense at this stage", he said.

"The greater relevance is of the timing of extreme monetary stimulus withdrawal by central banks which should start over the next six months," Sabharwal said in an email response.

Typically, gold and equities are believed to share an inverse relationship.

In the last one year, the S&P BSE Sensex index has returned 44 percent, which is in sheer contrast to a 13 percent drop in the price of gold.

Even in a little more than seven months of the current calendar year, the 30-scrip equity benchmark is up 14 percent whereas the yellow metal is down 8.5 percent.

MCX gold futures have dropped 11 percent in the past one year, losing sheen since scaling an all-time peak in August last year.

There is no good or bad time to invest in gold. That's the message from Ravindra Rao of Kotak Securities. "...especially in the current uncertain scenario where inflation is moving higher with interest rates at lows," he said.

"Although gold has taken a pause in 2021 after a rally in 2020 to all-time highs (MCX gold hit a record high in August 2020), the current environment of low interest rates coupled with higher inflation is the perfect scenario to stay diversified with some part of the portfolio into gold," according to Rao, CMT, EPAT, VP-Head Commodity Research at Kotak Securities.

The dollar has reversed some of its losses on hopes that the Federal Reserve might start tapering of bond purchases sooner than expected earlier.

However, the US central bank's dovish tone recently, in view of the rise of the Delta variant of Covid-19 and mixed macroeconomic data, has led many into believing that rate hikes in the US may not happen anytime soon.

According to Rao, this is a perfect setup for gold. "We don’t expect the Fed to change stance until inflation rises beyond control or US economic numbers show a sustained improvement."

Rao sees MCX gold probably moving above the Rs 50,000/10 grams mark by the end of the year, averaging around Rs.49,500.

Meanwhile, analysts say Indian equities are currently supported by positive macroeconomic factors, including earnings optimism, record GST collections, a drop in oil rates from highs and a rise in exports.

Others are more skeptical about the precious metal at the current juncture.

Gold is stuck in a tight range for last few weeks. "We expect it to break the upper range soon on rising Covid-19 cases in the US and China," said Manoj Kumar Jain, Director-Head of Commodity Research at Prithvi Finmart.

Gold may be choppy with mild upside potential in the very near term, Hareesh V Nair, Research Head-Commodities, Geojit Financial Services, told CNBCTV18.com. "I don't expect it can break its previous high due to negative fundamentals," said Nair, who is "slightly bearish on gold for the medium to long term."

The $1,960-2,000 per ounce region (spot gold) may act as stiff resistance, while strong support is placed at $1,645, he said.

There are chances of a breakout if global economic conditions worsen or any key policy changes come about from the US central bank. "Otherwise, I doubt," he added.

Gold has support at $1,788 and faces resistance at $1,834, but downbeat Chinese factory activity and lower-than-expected US manufacturing reading could lend it some support, according to Jain.

He expects gold to continue to hold $1,788 (Rs 47,350 per 10 grams on MCX) and test the $1,850-1,866 (Rs 48,800-49,000) levels this month.