Gold prices fell Wednesday, edging off of an 11-month high hit in the previous session. Some strategists see limited upside ahead after the commodity's significant rally this year.
The yellow metal will likely see a pause in the near term, said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management. The moves in gold this week came as the dollar index fell to a 2½-year low and the 10-year Treasury yield dropped to its lowest level of the year.
Before its dip Wednesday, gold had rallied for three straight sessions as concerns around North Korea-related tensions persisted and the dollar's relative value floundered.
"We've had just an extreme move against the dollar, and [the move in the 10-year and in gold] are really reflecting the weakness of the dollar, with gold spiking above the $1,300 level and bonds going below 2.1 [percent]," he said Tuesday on CNBC's "Trading Nation."
At this point, Schlossberg doesn't believe the current economic backdrop justifies the kind of negative sentiment that's often associated with climbing gold prices. The metal has already risen 14 percent this year.
Furthermore, he believes that unless the upcoming nonfarm payrolls data due out Friday surprises meaningfully to the downside this week, the upside for gold is quite limited.
Indeed, data processing firm ADP and Moody's reported 237,000 private sector jobs were created in August, beating out consensus estimates for 185,000, and the second quarter's revised gross domestic product figure came in at 3 percent, a reading that beat estimates, as well.
Still, despite its run this year, gold acts as a "good insurance policy in a world of low returns, low volatility and high risk," wrote Chad Morganlander, portfolio manager at Washington Crossing Advisors, in an email to CNBC on Tuesday.
"We have a long-term forecast of 4% return on gold. Still own it in our portfolio with a 5% position," he added.