Summary

* YTD & TTM performance are through 02-26-15 for consistency.

Last Thursday, as the dollar index gained by about 1.0%, spot gold gained as well. In the table here, take note of the past year’s inverse relationship between gold and the dollar currency it’s priced in here in the United States. You can see that the metals securities were all down sharply over the trailing twelve month period while the bullish dollar bet increased substantially. The two were clearly related in my opinion. More recently, though, over the year-to-date trade, it is harder to find a relationship. And on Thursday when the dollar index gained on strong economic data in the States and the UUP rose 1.0%, each of the metals securities listed here rose as well. I propose that this shows that gold sits on solid footing here, and may carry limited further risk relative to the dollar.

My only concern is relative to the bullishness I have for stocks at the moment. In my report recently published, SPY — Ready to Roar . I said the market should be clear to rise on the resolution of several issues that had plagued investors. This week, if investors receive reassurance about the European and American economies, stocks could resume the gains begun in February. If that happens, capital may be put to work in risky stocks in a greater way. As a result, capital could come from safe haven stores like gold and the relative securities that track it, silver and the gold miners. Still, I do not anticipate a lasting flow of capital in such a scenario, and would expect gold prices to regain any lost ground.

I do not necessarily see a pressing immediate upside catalyst for gold, but I do see certain potential catalysts that could fuel a gold rally. Importantly, I believe the dollar is topping out here. While the ECB is still readying extraordinary expansionary measures that would seem to support the dollar versus the euro, I believe much of that has already been priced into the value of the dollar. Besides, it seems that the European economy is stabilizing now, and so such measures could be limited in their use by the European Central Bank. I have no concern about Greece, and see any euro weakness caused by it fading with time. The U.S. Federal Reserve is preparing to hike interest rates, which would seem to support the dollar versus the euro. However, in its latest major communication through Janet Yellen’s testimony last week, I believe it was made clear that the Fed will not first raise rates until September or later.

In the meantime, geopolitical concerns are intensifying around the Islamic State and also about Iran. The risk of terrorism is heightened now in my opinion, due to the plans of the United States to raise the level of its engagement against the Islamic State. As a result, I expect recent threats could translate into actual terrorism events in the U.S. Any such issue of significant consequence would immediately cause a reevaluation of the value of the dollar, and drive capital to gold en masse. I believe this factor also currently sets a floor for gold.

In conclusion, considering the various factors I see supporting gold at its current level and the risks against it I see already well-priced in, I believe gold is on stable footing currently. Based on my view that the dollar is at or near its high, and given gold’s recent strength against dollar headwinds, gold may be impervious to any further dollar gains, which I expect would be minimal and temporary if they occurred at all. As a result, gold is worth holding at these levels in my view. I follow gold regularly, and so relative parties may find value in following my column .

Disclosure: The author is short UUP. (More. ) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.