Gold prices, which have soared in the recent weeks amid fears of Russia invading Ukraine, are likely to come down in the future, Joni Teves, precious metal strategist at UBS Investment Bank, told CNBC on February 21. According to Teves, UBS forecasts gold prices to come down to $1,600 per ounce by the end of 2022.

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Meanwhile, prices shot up as demand for the safe-haven metal rose amid tensions mounting in Europe after Russia ordered troops into breakaway regions of eastern Ukraine after recognising them as independent states.

Also read: Gold prices near 13-month high as Ukraine crisis deepens; at what levels should you buy?

In the Indian markets, gold prices surged to a near one-year high on February 22 on the MCX to Rs 50,467 per 10 gram. Silver prices rose to Rs 64,225 per kg, Mint reported.

“The situation remains fluid; we don't know whether the tensions will escalate or be contained from now on," Mint quoted V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, as saying.

In the global markets, spot gold prices touched a near nine-month high on February 22 at $1,909.54 per ounce. US gold futures gained 0.7 percent to $1,913.60, Reuters reported.

Traditionally, gold is considered a safe investment during times of uncertainty. Investors have been turning to the yellow metal over the last few weeks as Russian President Vladimir Putin kept the world on tenterhooks over Ukraine.

Also read: Should you buy gold now? How analysts are viewing the Ukraine-Russia conflict

In the future, Teves said the gold market would once again turn its focus on macro drivers such as real rates, US Federal Reserve Policy and growth outlook.

“An environment where real rates are rising and the Fed is tightening policy does provide a negative backdrop for gold,” CNBC quoted Teves as saying. She added that the strength in gold will “ultimately be short-lived.”

The Fed is expected to raise interest rates to cool inflationary pressure by the end of this quarter and this will impact gold prices, Teves said.

Also read: Physical gold to SGBs to ETFs: Know the best ways to invest in yellow metal

Yields of assets, such as US Treasury bonds, tend to rise on expectations of higher interest rates, bringing down prices of non-yielding assets like gold.

However, UBS sees the upside risks for gold as rising. The key risk to gold if allocations start to rebuild is that although real rates are moving higher, they are likely to remain in negative territory. Another factor that could lead to allocations in gold starting to rebuild is if investors grow more concerned about economic growth slowing down with tightening of policy by the Fed, the strategist said.

(Edited by : Shoma Bhattacharjee)