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The gold market has clawed its way back higher in recent weeks, and the question now is will the momentum continue. From a technical standpoint, gold appears to have considerable room to run on the upside. Gold is still nearly $50 per ounce away from the highs seen in mid-September, however, the market has already shown that covering that type of ground can be accomplished quite rapidly.

The real test for the yellow metal may be whether or not it can break through the previous highs around the $1350 level and forge higher ground on a sustainable basis. Given the speed of the rally that took gold prices to those levels in just a few weeks, it did not come as much of a surprise to see gold prices decline in back-and-fill trade. Now that the market has had a chance to digest those gains, the real test of the markets mettle may be seen.

The gold market has a number of issues currently working in its favor, and those issues are not likely to change dramatically any time soon. The current geopolitical landscape, dollar weakness, interest rate outlook and lack of significant U.S. tax and fiscal spending legislation may keep the gold market well-supported for some time to come.

Although a more aggressive Fed could potentially become a major headwind for the gold market, the central bank is quite likely to remain extremely patient and accommodating as it looks to normalize monetary policy. In fact, numerous analysts have already suggested that rates will not reach previous levels during the current tightening cycle, and the era of ultra-low rates could be here to stay.

The ongoing lack of meaningful inflation would seemingly reiterate the idea that the Fed will not be in any hurry to raise rates. Even with the current forecast of another hike in 2017 to be followed by another three hikes in 2018, rates would still be at relatively low levels. Of course, a lot can also change between now and when the Fed looks to tighten further next year. A major stock market collapse or reversal could give the Fed reason to pause, as could any number of economic or geopolitical events. A war with North Korea, for example, could have dramatic effects on the global economy and appetite for risk.

The equity markets and the dollar could hold the keys to higher gold in the coming months in the absence of geopolitical factors. The rally in stocks is a decade old now and has covered a massive amount of ground. With every new all-time high, the stock market could be one step closer to a top. Once the bull market does come to an end, gold could stand to benefit handsomely as investors look for alternatives.

The dollar could also fuel higher gold in the near to mid-term. Low inflation levels are already taking a toll on the greenback, and a lack of a viable U.S. tax cut and fiscal spending package could potentially send the currency even lower.