Joni Teves, UBS Investment Bank analyst predicts that the current strength in gold prices will be short-lived as geopolitical risk fades.

Recent weeks have seen gold prices rise as investors look for safe-havens to protect themselves from the Russian invasion of Ukraine, which could rattle global markets. Russian President Vladimir Putin will be inaugurated Monday. Vladimir Putin ordered forces into two breakaway regions of eastern UkraineHe announced that he would recognize the independence of his subjects.

Recently, spot gold crossed $1,900 and was last at $1,908.46 an ounce on Tuesday morning. It’s a significant increase from the levels of $1,800 in February.

Teves stated that the future of the gold market will be centered on macro drivers like real rates and U.S. Federal ReserveBoth the policy outlook and growth outlook are important. UBS believes that gold will drop to $1600 per ounce before 2022.

She stated that gold is not well-suited for an environment in which real rates rise and Fed policy tightens. “We do think that the strength should ultimately … be short-lived.”

The Fed will be closing in on the close of the current quarter. widely expected to raise interest rates at its March meetingTeves suggested that it would be a good idea to lower inflationary pressures. However, this could put pressure onto gold.

Higher interest rates are expected to drive yields in assets like U.S. Treasurys up, which could lower the value of non-yielding assets such as gold.

Yet, she admitted that upside risk for gold is increasing.

According to the strategist, “I believe the biggest risk here is when we begin to see reallocations into gold. With the expectation that even though real rates move higher, they will likely remain in negative territory and so an allocation of gold remains attractive.”

She also said that allocations of gold might start to recover as investors become more worried about slowing economic growth as the Fed tightens its policy.