Federal Reserve Chair Janet Yellen has let the world know the Fed will remain dovish. What's more, violence overseas is making gold a more attractive haven. Add to all that a huge short-covering in bullion and you have the makings of a 3.7 percent rally in gold, with the metal breaking above the $1,320 per ounce level.
Year-to-date, gold is up 7.5 percent. However, according to portfolio manager Chad Morganlander of Stifel's Washington Crossing Advisors, gold is still not a huge buy.
"There are better opportunities," Morganlander said. "For the next six to 12 months, gold will be down roughly 5 to 7 percent."
Morganlander believes the overall U.S. economy will strengthen, taking the dollar along with it. That, in turn, would bring down the price of gold.
"We like that as a non-diversified, non-correlated asset class," Morganlander said. "But, we just believe that there are better opportunities now. Yes, it's up year-to-date 7 to 7 ½ percent. The S&P  is up around 6 percent. We would overweight the S&P, underweight gold."
Since January, gold has been trading between $1,235 per ounce and $1,335 per ounce, notes Steven Pytlar, chief equity strategist at Prime Executions. He believes that over the past couple of weeks in particular, real interest rates have helped taken gold toward the upper end of that range. Real interest rates are the inflation-adjusted cost of borrowing.
"It has been supported all year – and even over the past couple weeks – by really just the decline in real interest rates," Pytlar said. "Gold and real interest rates tend to have an inverse correlation."
A chart of the inverse of real interest rates versus gold shows the relationship between the two, particularly over the past year. In other words, as real interest rates move down, the price of gold has moved up.
"Nominal interest rates minus inflation, that spread is getting smaller," said Pytlar. "Now that inflation is starting to come up a little bit [and] nominal rates have been steady for a while, you are seeing that real rate contract – get smaller – and gold has been supported by that."
However, with a rise in nominal rates (real rates plus inflation), gold could face a downturn, warns Pytlar.
"As the economy improves," adds Pytlar, "we could see money come out of bonds, nominal rates go up again, [and] gold lower."
To see the full discussion on gold, with Morganlander on the fundamentals and Pytlar on the technicals, watch the above video.