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As traders and investors return from the last holiday weekend of the summer, market volatility could potentially begin to pick up in the weeks and months ahead. There is certainly no shortage of things for investors to worry about right now, with mid-term elections right around the corner in the U.S. and an ongoing trade war with China and others possibly escalating.

The gold market has climbed back above the psychologically $1200 level, however, it remains unclear if the recent rally will be sustainable. The market does have a number of short-term headwinds working against it, including higher stocks and a stronger dollar. Economic optimism and appetite for risk have also continued to be robust, further diluting the metal’s appeal as a safe haven.

How much higher stocks can go and how long before the next major recession are important questions that investors have to be asking currently. The current level of complacency in stocks is in and of itself a cause for concern, as such low levels of fear in the marketplace can make it increasingly vulnerable to a significant, domino-effect sell-off.

Speaking of stocks, the market has been showing some ominous warning signs lately that cannot be overlooked. Of particular note is recent action in stocks and the VIX. The CBOE’s volatility gauge, often referred to as the market’s “fear gauge,” has been moving higher in union with stocks. Although this does not necessarily indicate a market crash, it could potentially point to some underlying risk aversion ahead of some key issues such as the upcoming elections.

Another recent warning signal that has been discussed is the current valuation comparisons between stocks and real estate. Stocks have reached a level significantly above the median home price in the U.S., and some analysts have suggested that this could also spell trouble in the months ahead.

Stocks also appear to be highly correlated with the news cycle at this point, and Friday’s report of another $200 billion in tariffs by the U.S. on Chinese goods sent stocks into a tailspin.

Although stocks may be the next major driver of gold prices, the dollar has arguably been the biggest obstacle to higher gold over the last several months. The greenback has traded higher versus a basket of major currencies, and could potentially have more upside still in the tank. The notion of two more interest rate hikes this year, as well as accelerating inflationary pressures has provided the currency with some solid support. The dollar has backtracked a bit in recent trade, however, and is vulnerable to some key issues. The Fed could take a more dovish stance this year or next, and could be in no hurry to hike rates much further. With the mid-term elections coming up as well, a change of power in the House or Senate could also have a major impact on the dollar and global currency markets.

With so many potential wildcards, long-term investors appear to be getting increasingly interested in gold at or around current levels. Whether or not a long-term bottom has been reached remains unclear at this point, however, the recent slowdown in the selling could be indicative of larger bargain hunters stepping in to the market at current levels. Although any further declines cannot be ruled out, such declines would likely be met with significant buying interest and prices may not fall much further than recent lows.