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The Dow Jones Industrial Average closed at a fresh record high on Friday, trading up to 26,743.50. The strong appetite for risk as well as a stronger dollar has been major factors in gold’s lack of luster. Despite numerous potential issues that could spoil the party for stock investors including an ongoing trade war and rising inflation; stock markets have remained the place to be for risk-hungry investors in search of yield.

A day or reckoning will come for global stock markets, however, it is very difficult to say when the levy may finally rupture. From a technical standpoint, fresh all-time highs in stocks are providing an all-clear signal to buyers and the market could see another fresh, significant move higher as markets enter a ‘melt-up” stage.

This week, the Federal Reserve will be having its regular policy meeting, with a decision on rates to be announced Wednesday. It is widely expected that the central bank will hike rates again by 25 bps. With another hike already baked into the cake, investors will likely be far more interested in whether the Fed will look to hike rates once more before the end of the year. As of now, it appears there is a very strong likelihood of one more 25 bps hike in November.

Despite the ongoing path of higher rates, the bigger picture begs the question of just how high rates may get in the current tightening cycle. Although the economy is strong and has essentially reached full employment, numerous potential roadblocks could keep the Fed from raising rates much further. Increasing chances of recession, the potential for a political shakeup in the U.S., an ongoing trade war and weakening stimulus effects could all influence the central bank’s policy decisions.

Although the gold market has had little to show in the way of upside in recent months, the selling pressure appears to be exhausted at this point. Another fresh leg lower cannot be ruled out, however, the market does appear to be in the process of building a longer-term base that may be constructive. The construction of a long-term base can be an extensive process, and investors should approach the market at this point with a long-term horizon in mind. The longer the market trades sideways the more explosive an upside breakout could eventually be.

The timing of the next economic downturn is the subject of much debate, with some analysts stating it could be years and others voicing strong opinions that the next recession will take hold in the next year or two. Given the age of the current economic expansion and bull market in equities and the likely wearing-off of the boost seen from tax cuts and government spending, the next downturn could be seen sooner rather than later. Add to this the potential for a major shakeup in U.S. politics as the midterm elections are quickly approaching and you could have a recipe for a major reversal in financial markets.

For the patient investor, the gold market may provide an excellent long-term value at or around current price levels. At some point, bullish fundamentals will once again fuel buying in this key asset class, and the market could enter a protracted bull market that could send prices to previous all-time highs or beyond.