The gold market is seeing some moderate selling pressure to kick off the new trading week. Strong appetite for risk continues to stand in the way of higher gold prices, and stocks appear set to venture further into new all-time high territory. The question is: will it last?

Geopolitical factors that have driven buying in gold in recent months have waned a bit, and even another missile fired over Japan recently by North Korea did not fuel any significant flight to safety by investors. Perhaps saber-rattling by the North has simply gotten old at this point, but risk assets may potentially continue higher unless there is some type of further escalation in the conflict.

With risk appetite remaining robust-for now at least- gold could potentially see some profit taking and selling pressure in the coming days and weeks. In fact, some back and fill trade could be healthy for the market if it is to make a sustainable run higher.

Investors will have other figures to chew on this week, as there is some key economic data set for release and as the U.S. Federal Reserve meets to discuss monetary policy. Investors will get the latest readings on Housing Starts, Weekly Jobless Claims, PMI Composite Flash and more. Although any of the key data points set for release this week can potentially be market-moving, investors will likely focus their attention on Wednesday’s FOMC meeting announcement.

No interest rate hike is expected from the central bank at this meeting’s conclusion, however, the Fed could give clues as to its plans for further rate hikes later this year. Following the FOMC announcement, the Fed will also release its most recent forecasts. This will then be followed by a Fed Chair press conference at which Fed Chairwoman Janet Yellen will answer questions and provide more detail about the central bank’s forecasts.

Although another rate hike in 2017 seems like a good possibility, some issues in recent months could potentially keep the central bank on hold. An ongoing lack of inflationary pressures could be one obstacle, geopolitics could be another. A lack of major tax or fiscal spending legislation in the U.S. could be yet another hurdle to higher rates.

Whatever the case may be, investors will want to see if the Fed maintains a fairly dovish attitude or if the central bank appears to be leaning towards a more hawkish stance regarding monetary policy. A Dovish-sounding Fed could keep stocks and gold moving higher, while a hawkish Fed could potentially weigh on both asset classes. Any positive correlation between gold and equities, however, is not likely to last too long. At some point, if stocks begin to come under significant pressure or if another crash takes place, a great deal of investment capital could potentially find its way into gold. Even with the notion of rising rates, the path of further hikes by the Fed is likely to be very slow and very gradual and will likely not deter investors from putting capital to work in gold should stocks enter a bear market. 

Gold ended the week on a high note and appears poised for further upside. That being said, however, the market could see a pullback as some back and fill trade may be likely given the recent sharp rise in price. In addition, markets do have a tendency to return to breakout levels, and if gold does take a dip it could see aggressive buying.

U.S. jobs data reported on Friday by the Bureau of Labor and Statistics showed the U.S. added 156,000 jobs in August, well below analyst expectations of 180,000 jobs. The unemployment rate ticked slightly higher as well, from 4.3% to 4.4%. Although the amount of jobs added was not a total letdown, the miss in additions along with a slight move higher in the unemployment rate could give the Fed reason enough to reconsider its plans for another rate hike this year.

The notion of ongoing low rates gave stocks a boost on Friday, and may be one of the only things at this point that is keeping the rally in stocks going. Stocks have remained stubbornly resilient in the face of numerous domestic and international geopolitical issues, but you have to question just how much might be left in the tank at this point.

The possibility of no further action from the Fed this year could potentially keep the dollar under pressure, although the greenback is attempting to find a bottom in recent action. If the dollar is able to find some type of base at or near current levels, it could potentially give gold a reason for pause. On the other hand, however, if the dollar begins making fresh lows, gold could see further strength and a rapid rise.

In the absence of any fresh geopolitical news, the next major catalyst for markets could be the upcoming fight over the U.S. Government’s debt ceiling. U.S. lawmakers will be returning to Washington this week following a month long recess. U.S. Treasury Secretary Steve Mnuchin has said that it is critical for Congress to act before the September 29th deadline, and some treasury bill investors already appear to be shunning debt that comes due in early October just in case a deal is not reached.

It may be difficult to imagine a scenario in which the government defaults, but it is a possibility that cannot be ignored. While Mnuchin has already said that the debt limit would be raised, the issue is likely to be far more bi-partisan this time around which could make investors nervous. Until a deal is made, it could potentially keep investors on edge, weighing on risk assets while giving perceived safe haven assets such as gold a boost.

From a more technical standpoint, it is looking more and more like gold has made a long-term bottom. Further strength in the yellow metal may potentially draw in more buyers, and any significant dips in the price of gold may be pounced on by investors. 

Gold is showing impressive signs of strength in recent trade, and the yellow metal could potentially be in the beginning stages of a significant breakout. The gold market has been driven higher primarily by increasing overall risk aversion and a weaker U.S. dollar.

The situation with North Korea has actually taken a backseat in recent days, as last weekend’s violence in Charlottesville has been a main focus of both government and investors this past week. The rally by white supremacists was the largest of its kind in some time, and unfortunately resulted in the deaths of two state police officers and a young woman who was protesting the rally.

The violence and hatred seen was disturbing, but the Trump administration’s response also ruffled a lot of feathers to say the least. Trump’s response that there was fault on both sides elicited responses from many in the GOP, as well as democrats and even other world leaders. Although Trump responded again two days after the rally, many seemed to feel that it was too little too late. Trump then, however, made comments from Trump Tower in New York at a press conference, once again seemingly blaming both sides involved.

The response to Trump’s press conference has been widespread and harsh. It seems that even his closest advisors don’t know what to say about him anymore, and hopes for his new Chief of Staff being able to bring more order to the administration may be fading.

The recent actions and commentary from Trump have reportedly fueled even more disorder in the White House, and investors are taking notice.

In recent days, Trump fired his chief strategist Steve Bannon, who was recently quoted by the Washington Post as saying “No administration in history has been so divided among itself about the direction about where it should go.”

The current state of the administration has people concerned, and really questioning whether or not any of Trump’s agenda will be able to be implemented.

The recent terrorist attack in Barcelona may also be fueling some degree of risk aversion, and the current state of geopolitics may keep a floor under gold and perceived safe havens for the time being.

Stocks may be a major catalyst for sharply higher gold in the coming weeks and months. Stocks have begun to show some significant signs of a major top, and a major sell-off could be in the making. Should equities begin to really falter, a significant amount of investment capital could be directed into gold and other hard assets.

Recent commentary from Fed officials would seem to suggest that the era of low rates is far from over. As the Fed remains accommodating with regards to monetary policy, gold investors may see a green light to buy, even as the yellow metal extends the recent rally. The potential for ongoing low rates, a major reversal in stocks, a weaker dollar and heightened geopolitical tensions may all fuel further upside in gold and other hard assets.

The upcoming trading week may be critical for the gold bulls, who would like to see a solid close above the $1300 per ounce level. 

The gold market continues to show signs of strength even with some bumps in the road this past week. Ongoing geopolitical issues remain a driving force behind risk aversion and desire for perceived safety, and numerous U.S. domestic issues are also likely playing a major role.

The Trump administration continues to be affected by the Russian election interference investigation as well as the seemingly constant state of chaos within the white house. After hiring hedge fund manager Anthony Scaramucci as his communications director, President Trump received the resignations of both Press Secretary Sean Spicer as well as Chief of Staff Reince Preibus. Both men were unhappy and disagreed with the President’s decision to bring Scaramucci-commonly referred to as “the mooch,” –into the administration as communications director.

Scaramucci didn’t last long, however. Following a profanity-laced rant against leaks and some of the President’s advisors, freshly sworn in Chief of Staff John Kelly recommended Scaramucci be fired. Surprisingly, the President followed his recommendation.

Further shakeups within the white house could also potentially be seen as the President has made his displeasure with Attorney General Jeff Sessions very clear.

These examples illustrate the general sense of disorder coming from the white house, and the American people appear to be tiring of it quickly at this point. The “Trump trade” appears to have run its course, and without the passage of any major tax or fiscal spending legislation investors may become increasingly happy to take money off the table.

These issues have had a significant impact on the dollar index as well. The greenback has lost all ground gained since Trump was elected, and could potentially be setting up for a fresh, significant leg lower in value. The lack of major legislation as well as the ongoing lack of inflation could keep the dollar on the defensive, and the Fed may be able to remain on the dovish side of the ledger regarding monetary policy in light of these circumstances.

Looking abroad, North Korea and its nuclear weapons program will remain a major area of focus for the U.S. and its allies. Another recent ICBM missile test by the nation has furthered the idea that the nation may be capable of hitting the U.S. mainland with a nuclear weapon. The test brought a U.S. response this time, with American bombers flying over the Korean Peninsula in a show of force.

Although diplomacy is still possible, it would seem that the window for a peaceful resolution is closing. With the U.S. unwilling to tolerate a North Korean nuclear threat, the heat on the nation could be turned up economically through further sanctions and isolation. The ongoing saber-rattling may keep gold supported in the meantime.

Gold investors will also be paying close attention to global equity markets. The broad market S&P 500 is starting to show some signs of topping. If or when the stock market reverses course, it is quite plausible that a significant amount of investment capital finds its way into gold. Gold could be getting ready for a multi-year cyclical bull market as stocks get ready for a protracted bear market.

Recent action in gold has been bullish, but the yellow metal will need to break its recent highs to attract fresh buying. Conversely, if gold is not able to maintain trade in higher territory in the near-term, frustrated bulls may sell sending gold back to the lower end of its recent range. 

The gold market has been showing some signs of underlying strength in recent trade, as the metal has recouped nearly $50 per ounce recently. Although gold still remains within its multi-month trading range, the yellow metal could potentially be headed for an upside breakout.

Gold has had a number of bearish factors working against it in recent months. These factors include a previously more hawkish-sounding Fed, all-time highs in equity markets and a stronger dollar. Despite these issues, however, the yellow metal did not suffer any major breakdowns in price.

You could make the argument that the tide has turned in recent weeks. The Fed appears to have taken a very different tone in recent commentary. Although some policy hawks remain, the central bank seems to be taking a more cautious approach regarding monetary policy. In fact, the central bank will likely not raise rates again until December, if they do at all again this year.

Although the central bank is fulfilling its mandate regarding full employment, inflation remains well under the Fed’s desired target of 2% on an annualized basis.

The dollar seems to be telling a similar story. The greenback strengthened in the aftermath of the Trump Presidential victory on the idea of fiscal spending, higher economic growth and tax cuts. The administration, however, has yet to pass any major legislation regarding infrastructure or tax reforms. Currency markets have been paying attention, and the dollar could be on the verge of a significant leg lower in price.

Further weakness in the dollar could keep gold well-supported, and as long as the dollar remains on the defensive gold is not likely to see any major moves lower.

This would seemingly leave equity markets as the primary hurdle standing in the way of a major upside breakout in gold. Stocks have not strayed far from all-time highs, but you could certainly argue that the aging bull is getting quite long in the tooth. Some analysts have even suggested that a major top in stocks could be seen in the coming weeks.

If or when stocks do reverse course, the fallout could be significant. Although estimates vary, the market could potentially see a drop of over 20 percent, and some have even suggested that a drop of 40 or 50 percent could be seen. If or when the trend does turn lower, much of the capital currently invested in stocks could begin to look for alternatives. Gold could very well be at the top of the list and could see massive inflows if stocks see a swift and severe correction or enter into what could be a protracted bear market. 

In the meantime, safe haven buying may also keep gold moving higher. The Trump administration appears to be in serious turmoil. On Friday, Press Secretary Sean Spicer resigned as Trump hired Anthony Scaramucci as his communications director. The shakeup in the Trump White House could be just getting under way. The President has been under increasing scrutiny as the ongoing investigation into alleged collusion with Russia by the Trump campaign to sway the election is taking a toll.

The path of least resistance in gold has turned decidedly higher, and a breakout of recent highs could possibly set the stage for a major leg higher in price.