NEW YORK (TheStreet) -- Gold prices dropped to their lowest level in about a week on Tuesday, but it could still be a good commodity to own in an environment of political uncertainty ahead of the November elections, Goldman Sachs Head of Commodities Research Jeff Currie said on CNBC's "Power Lunch" on Tuesday afternoon.
Goldman Sachs sees gold going from its current price of about $1,330 per ounce to $1,280 per ounce by the end of 2016.
That prediction is a result of the firm's outlook on interest rates, he said. Goldman sees a 65% chance of the Fed hiking rates at its December meeting and of course, higher rates means lower gold prices.
Gold is non-interest paying and struggles to compete with assets that bear a yield when the Federal Reserve hikes interest rates.
While he may not want to own gold "tactically" for the reasons mentioned, Currie does think it's good to own in our current political state.
"I always like to say gold is a great hedge against politicians, and we have a lot of political risk in the market right now. So gold has a strategic purpose," he explained.
"Why? What's the tie between gold and politicians?" CNBC's Brian Sullivan asked.
"Well, if you think about the correlation between rates and you think about when you debase a currency or weak dollar, what people gravitate to are hard assets and gold is the epitome of the hard asset," Currie explained.