Gold futures for delivery in March 2017 were about $1,230 per ounce during overnight trading on February 15, 2017. Gold has rebounded significantly over the past few months, primarily fueled by some political risks. Additionally, gold prices snapped a four-day losing streak on Wednesday.

According to Principal and Co-Founder at Altavest, “The precious metals are momentarily disconnected from their usual correlations with outside markets…It could be that gold’s strength is evidence of skepticism of the sustainability of the stock market’s melt-up.”

The rise in gold prices in Wednesday’s trading was primarily attributed to the U.S. dollar’s retreat, and the U.S. Dollar Index pulled back below 101 during overnight trading between February 15 and February 16, 2017. A fall in the U.S. dollar would benefit gold prices and other precious metals.

Trader Jason Bond, who is invested in the VanEck Vectors Gold Miners ETF (NYSEARCA: GDX) in his long-term ETF portfolio, stated, “There could be some volatility in gold prices, primarily attributed to Federal Reserve Chair Yellen. However, there are some political risks in both the U.S. and Europe, which could cause some investors to look to gold and gold miners for safety.”

Germany Is Repatriating Gold

Germany’s Central Bank seems to think gold is still relevant. In an official announcement in early February 2017, the Bundesbank indicated that it repatriated close to half of its gold reserve. Germany’s central bank is looking to bring home its gold reserves stored in New York, Paris and other cities, faster than it planned.

This may be a signal that Germany is afraid of another financial crisis and some political risks. The central bank has already moved over 550 tons of gold from New York and Paris, and the Bundesbank is looking to have half its gold reserves back in Germany by the end of this year.

Can Political Risks Boost Gold?

The first round of the French Presidential will be held on April 23, 2017, and there are some political risks. French Presidential candidate Marine Le Pen is adding some volatility to the currency markets, and she has been calling for France to leave the Eurozone and discontinue its use of the euro.

Le Pen stated, “The euro isn’t a currency, it’s a political weapon. The euro is a knife which the EU puts into the backs of the people to force them to go where they don’t want to go…Either the EU gives French people back their territorial sovereignty, borders, control over their economy, control over their currency and the superiority of their laws, or I will say to the French people that we should leave the EU.”

Based on Le Pen’s comments, there is Frexit risk on the table. With the U.K. leaving the EU just last year, if France leaves the EU, it could be detrimental to the union and the euro. That being said, if this occurs, many investors could flock to gold as a safe haven. However, some investors are not taking the Frexit risk seriously. If Le Pen wins the French Presidential election, the country could withdraw from the euro, which would add to political and economic risks, and in turn, gold prices could rise.

The Bottom Line

Gold prices is still trading above $1,200 an ounce and the yellow precious metal could continue higher. The Frexit risk could cause some investors to pay more attention to the French Presidential election. If market participants begin to take note of the risk of France leaving the EU, some investors may flock to gold as a safe haven.