Gold rallied this week as investors sought shelter under its safe-haven status amid emerging market turmoil, but according to one analyst, going long gold as a crisis hedge may not be the smartest trade out there.
"The real next leg higher in gold is going to be based on rising inflation rate expectations, not on some crisis bid based on Argentina defaulting again. So for now, I think we've seen the short-term highs in gold," Tom Essaye, President at Kinsale Trading told CNBC's "Asia Squawk Box."
Spot gold prices hit a two-month peak of $1,278 on Monday as fears over a sharp sell-off in emerging market currencies hit global equity markets, but the precious metal has since retreated sharply to trade around $1,256 an ounce.
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"From a crisis standpoint, $1,280 is about as good as you're going to get, unless we see real material deterioration in emerging markets or in China," Essaye said.