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Gold is back – for now. But the reasons behind its sudden and unexpected renaissance don't offer the most compelling case for the sustainability of that bounce-back.

Just last month, gold was barely $1,200 (U.S.) an ounce, plumbing the depths of a steep plunge that had wiped roughly one-third off its value over the previous nine months. This was no correction in a prolonged bull market, this was a collapse – by all appearances the death of a long-time asset play. Investors were fleeing.

Then, suddenly, they weren't. Gold topped $1,400 an ounce Tuesday, the latest peak in a high-speed turnaround that has seen the precious metal recover 17 per cent of its lost lustre in a matter of weeks.

But what has brought bullion back so suddenly may not have enough substance to sustain a longer-term recovery. Much of gold's bounce is about investors playing defence against risk – and some of those risks look both transitory and overblown.

The immediate impetus for gold's gains in recent days is the danger of Western military intervention in Syria; rising Middle East tensions are a classic geopolitical trigger for buying gold.

Not to play down the seriousness of the situation in Syria, but the country poses only a minor risk to global economic stability; even for the oil market, Syria is a minor producer, an even smaller exporter, and it's sufficiently removed from the Persian Gulf that it poses little risk of disruption to the flow of global supplies. And as we've seen in the past with Middle East unrest, financial markets have a habit of overreacting to the risk, and reversing course quickly on the reality; Western intervention or not, any progress toward a Syrian resolution could unwind gold's geopolitical risk play in a big hurry.

The gold-rally cheerleaders do point to a couple of other upcoming political battles that could extend the risk play on gold: The September election in Germany that raises uncertainties about the future direction of the still-troubled euro zone, and another debt-ceiling debate in the United States as the government bumps up against its current borrowing limits in October. The uncertainty over the future of Washington's finances, especially, could rekindle gold's attraction for wary investors over the next couple of months. But again, the past has shown us that the perceived risks in Washington's never-ending budget battles are much worse than the reality. The lift will be short-lived; the downside risk upon the inevitable resolution, substantial.

There's really only one risk that matters here: The Federal Reserve Board. What the Fed might choose to do with its highly accommodative monetary policies in the coming months has been the fuel in gold's reignited engine over the summer – and the outcome will make or break bullion.

Gold's slump was brought about in no small part because of anticipation that the Fed would soon begin to unwind its quantitative easing (QE) program of debt securities. Those expectations lifted bond yields and the U.S. dollar – and gold, which has a long history of trading inversely to both, slumped pretty much on cue. But now, with U.S. economic indicators over the summer looking decidedly mixed, a growing sense that the Fed will take its time removing monetary stimulus has reversed the greenback and stalled the climb in bond yields, sending investors back in gold's direction.

But the day of reckoning for the Fed – and gold, and bonds, and the U.S. dollar – may not be far off. Perhaps as few as three weeks off, in fact.

That's when the Fed's monetary policy-setting body , the Federal Open Market Committee, holds its next meeting. If Fed chairman Ben Bernanke has his way, the central bank will announce after that meeting that the committee has agreed to begin reducing its asset purchases. It might even outline a timetable of how the removal of QE will progress over time, a precursor to increases in the Fed's policy interest rate. If it doesn't happen that meeting, we can be sure it will at the following FOMC gathering, in late October.

That is when we'll find out if gold's turnaround has legs. Until we know what the Fed has up its sleeve, any price level for gold, for whatever reason or excuse, looks highly speculative.

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