The senior analyst believes events in the Middle East and Japan are likely to push prices higher in the short-term, while structural issues in the Eurozone and higher-than-expected inflation figures across the world will support the precious metal in the long-term.
"Back in January, things were looking a lot better on the macro front and there was not so much need for safe-haven assets like gold to buffer portfolios," he said. "We saw a lot of investors taking profits and prices were looking a little shaky."
"But increased political risk across the world has put gold back on investors’ radars. In the short-term, events in Japan and the Middle East are clearly making investors anxious, but it’s the structural macro issues that will provide gold prices with long-term support."
"Gold hit its inflation-adjusted high at around $2,000. With prices where they are now, gold is attractively valued given the number of macro drivers."
Arnold says the surmounting problems in the Eurozone are likely to give gold its biggest boost.
"It’s a problem that’s not going to go away any time soon," he added. "The powers that be seem to be jumping from stop-gap to stop-gap, but nothing is being done to address the deep-rooted issues."
Portugal’s austerity measures were rejected by its parliament today, sparking fears that a bail-out is now on the cards.
Manager of t1ps Smaller Companies Gold Tom Winnifrith agrees growing macro uncertainty is making gold look more attractive, although he doubts that events in Japan and the Middle East will have a significant impact.
The Alpha Manager said: "With the news that’s coming through today, it looks like Portugal will default, while Ireland most certainly should. When one drops out, usually others follow."
"Even if the US and UK do see some GDP growth, it’s important to remember this is a jobless recovery. Governments will continue to print money, which is only going to give gold further support."
According to Financial Express data, t1ps Smaller Companies Gold has returned 87.49 per cent in the last 12 months, more than any fund in the entire IMA universe.
Performance of fund vs index over 1-yr
Source: Financial Express Analytics
Head of Capital Spreads Simon Denham expects gold to receive a short-term boost from events in Libya.
"Gold is yet to outdo its record 1444.9 per ounce which was hit 7 March, and at 1428.4 currently, it is still way off. However, US forces have spoken of further strikes against Libya very shortly and this might push investors back into safer assets such as gold. Technical analysis shows potential upside looking for $1432 with $1412 as support," he said.