Gold prices have crept higher in recent weeks as investors grow concerned about elevated geopolitical tensions. However, according to Citi analyst Alexander Hacking, gold investors should keep expectations in check.

In a new note Monday, Hacking reiterated his cautious long-term outlook for gold prices but said gold miner stocks could benefit from rising global tensions over the next several months (see his track record here).

“Citi’s house view is that prices can remain supported in a $1,260-$1,360/oz range with an upside bias for the remainder of 3Q, particularly if the geopolitical climate deteriorates further,” Hacking wrote.

Gold's Glissando

Gold jumped to $1,335/oz Monday morning after North Korea completed its largest of six hydrogen bomb tests over the weekend. On Sunday, U.S. Defense Secretary James Mattis said a North Korean attack on the U.S., Japan or South Korea will be met with “a massive military response.” Gold prices are now hovering near their highest levels of the past year.

Gold prices have also likely gotten a boost from dovish remarks from the Federal Reserve governor Lael Brainard. On Tuesday, Brainard hinted that lackluster inflation readings may require the Fed to slow down its pace of interest rate hikes. Investors typically view rising interest rates as bad for gold prices.

In terms of individual stocks, Citi has upgraded Kincross Gold Corporation (USA) (NYSE:KGC) from Sell to Neutral, but Hacking prefers Buy-rated Barrick Gold Corp (USA) (NYSE:ABX) and Pretium Resources Inc (NYSE:PVG).

The SPDR Gold Trust (ETF) (NYSE:GLD) is up more than 6 percent in the past month.

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