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This surprise winner will continue to outperform

Talking Numbers

It's no big secret that gold has outperformed stocks sizably so far in 2014.

The yellow metal is up about 10% while the benchmark S&P 500 index has only gained 2% since the year began. One noted analyst believes there will be more to come.

Michael Dudas, Precious Metals and Mining Analyst at Sterne Agee, says there are several reasons gold is moving higher.

Dudas believes that the cause of the recent safe haven run-up in bullion will continue. He sees tensions in Ukraine as lingering, no matter what the outcome is in the near-term. He also sees a technical reason for gold to move higher.

(Read: Gold holds near $1,335; traders eye US jobs data, Ukraine)

"You have continued support of technicals," says Dudas. "You have the gold price break above its 150-day and 200-day moving averages. That's been very supportive after a multi-year decline in the metal."

Though Friday's employment data release may add a little bit of volatility to gold, it's the longer-term issues that Dudas believes will be more important. "As long as the gold market has discounted the taper," says Dudas, "and the Fed… continues to have zero interest rate policies for a pretty long period of time… I think that combination will continue to trade gold higher."

And then there are the currencies, particularly, the US dollar.

(Read: Gold ends higher; boosted by ECB, weaker dollar)

"It's all about the US dollar," says Dudas. "There's a very empirical relationship: strong dollar, weak commodity prices, vice versa. The dollar has to be supportive. Given macro policies of the Fed, that's going to drive [whether] there's going to be stability to the dollar."

At the same time, Dudas sees currency instability elsewhere as leading to a bid up in gold, particularly in the high-gold-demanding countries of India and China.

"The at-the-margin currencies are important," says Dudas. "Emerging gold-buying markets will be a little bit more unstable and that could lead to a higher premium placed into the gold market."

To see the full interview with Michael Dudas on what's next for gold, watch the video above.

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