Strategist: Why you need to ‘stay away’ from gold

Investors and traders have gone for gold in the past few months, but some analysts warn that the metal could be set for a drop.

"Gold is a notoriously difficult trade," said Eddy Elfenbein, editor of the Crossing Wall Street blog. "It's a highly speculative bet on the direction of short term interest rates, real rates, and I think with the Fed where they are right now and with the last inflation report, I don't think real rates are going to go any lower for the rest of the year."

Gold lost a third of its value between the start of 2013 and the end of 2015. But in 2016, the metal has become a highly sought after commodity, as the Federal Reserve has avoided tightening interest rates, and the dollar has turned a bit lower. In fact, gold has become so popular that the SPDR Gold ETF (GLD) currently leads all ETFs in net fund flows this year, according to

However, some analysts are suspecting possible action from the central bank that may stop gold's steady climb.

"I think the Fed has made it clear that its bias is towards tightening. I don't know if they will, but that's clearly their bias. So that's why I would stay away from gold right now," Elfenbein said Tuesday on CNBC's "Trading Nation."

Read More Gold steadies as dollar firms; silver hits 11-month high

Meanwhile, other analysts remain optimistic about the precious metal's rally. In fact, according to Todd Gordon of, gold is in a win-win situation.

"The way I see it, gold should rally in either of these two situations: One, the Fed is on hold for the rest of 2016 and stocks break to a new high, which should keep the U.S. dollar under pressure, pushing gold higher. Or, if the stock market does fail, gold should act as a safe haven, giving it a bid," Gordon said on "Trading Nation."

Gordon's optimism led him to make a bullish bet in the options market, buying the GLD 120-strike call expiring in June and cutting costs by selling the 122-strike call against it. The trade returns maximum profits if the GLD rises to $122.

That level would mark a 20 percent rally for gold this year, a substantial comeback for the yellow metal.

On the other hand:

Read MoreTrader: Gold is about to break out—here's why


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more