The gold market is now calm after a sudden crash earlier. It seems that investors are focusing on the stock market in anticipation of policy tightening by the Federal Reserve.

But Western analysts say the prices are actually understated by about 12%, and this underestimation is starting to catch the attention of well-known hedge funds. A couple of investors already revealed that they project an impressive rise in the yellow metal.

For example, John Paulson of Paulson & Co said he could see a parabolic rise in gold as rising inflation will force investors to ditch bonds and cash. Mark Mobius, founder of Mobius Capital Partners, also said investors should allocate 10% of their portfolio to gold.

Recent forecasts and price movements also hint that the Fed will postpone its plans to taper bond purchases for the next few months, and maybe the rest of the year. This uncertainty intensified after the labor market data turned out to be disappointing.

Analysts initially expected a 720,000 increase in the number of jobs, but the US Department of Labor said only 235,000 jobs were created. Following this, dollar fell sharply, while gold prices rose. Analysts now say the yellow metal could return to $ 1,900 an ounce.

But a positive employment report for August would force the Fed to cut monthly bond purchases by the end of the year.

So, the US monetary policy will remain a heavy burden on the gold market. Although tapering could be delayed until March, it is unlikely that it will be reversed entirely because at some point, the Federal Reserve will have to tighten it. Accordingly, such a scenario will put pressure on gold.