Large fixed wing UAS was conducting touch and goes when a Visual Observer saw an approaching aircraft. The UAS avoided the other aircraft until it could return to the airport safely.

Narrative

While conducting pattern work during a training flight at ZZZ; I was on final approach to Runway XX for a normal touch-and-go. At approximately 1.5 mile final and 500 feet AGL I was alerted by a second pilot that there was an aircraft converging at a 90 degree angle to our flight path from the south. The instructor called a go-around and I applied full power and climbed. Our [visual] observer called out the aircraft about the same time I began the go-around. While climbing on the upwind; Aircraft Y crossed over the airfield at approximately 400-500 feet AGL according to ADS-B data. The aircraft made several circles over the airfield and the adjoining [area] for approximately 10 minutes before departing the area to the south. The aircraft's flight path was erratic and we were unsure of his intentions so we held our aircraft at approximately 3;200 feet AGL while we tried to determine what he was doing. Our [visual observer] called out his position constantly and kept us in a safe position. When the aircraft finally left we ensured that it was departing the area for good before bringing the aircraft back into the traffic pattern and finishing our training flight. Had we required a go-around before touchdown we would have had an elevated risk of collision with the aircraft. The aircraft crossed over the middle of the airfield at low altitude right around the time we would have touched down. Estimated closest separation was about 1;000 feet basically right on top of the aircraft.