The yellow metal has broken out this month, rallying nearly 9% and clawing its way back to its highest level since May 2013.
Todd Gordon, founder of TradingAnalysis.com, called the rally nearly three weeks ago and says the technicals support even higher highs.
“We have broken out from resistance,” Gordon told CNBC’s “Trading Nation ” on Tuesday. “In the GLD here, which is the ETF that tracks gold, you’ve got a level right about $131.25, that was the high back from mid-2016. That was a breakout level. Looks like there’s a spike high here at about $133.50.”
Both of those resistance levels have been breached this week. The GLD gold ETF broke above $130 last week and spiked as high as $135.55 on Tuesday.
“What fails as resistance acts as support. So anybody who is short is certainly going to use that as a level to buy to cover, which will create more buying interest, and then of course breakout buyers will push it higher,” said Gordon.
However, while he sees it headed higher, Gordon says he does not want to chase at these levels and instead would buy on any weakness.
“Let’s monitor in the GLD any kind of pullback towards $132 …, which I think should serve as a nice entry point to take us higher,” said Gordon. That’s 2% below its current price.
On the upside, Gordon sees the potential for gold to surge to fresh multiyear highs.
“All the way up around the $150 mark,” said Gordon. “If the Fed is continuing to be extremely dovish, U.S. rates are catching down to the rest of the world, U.S. dollar is falling, and maybe we have concerns about global growth going forward, I don’t see why gold wouldn’t make that move.”
He added that it may not reach that point until at least six months out, maybe 18 months. Gold last traded above $1,500, or $150 on the GLD ETF, in April 2013.
The SPDR Gold Shares (GLD) was trading at $132.83 per share on Wednesday morning, down $1.37 (-1.02%). Year-to-date, GLD has gained 7.42%, versus a 9.51% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of CNBC.