(Kitco News) – As gold prices continue to trade firmly above $1,300, one technical trader says the precious metal has room to go higher as charts point to more gains.
“We're seeing a pretty impressive test of the recent range highs, and I think that based on what the macro situation looks like, gold should push higher,” Todd Gordon, founder of the TradingAnalysis.com, told CNBC.
The technical trader pointed out that even though both traded “in a fairly tight correlation” in 2017, a gap developed in July. GLD’s 8% rise since July has it beating the TLT, Gordon said.
“What we see here is TLT diverging just a bit, meaning we are approaching those June highs but have not broken out where GLD looks poised to continue on through,” noted Gordon. “So as both markets are pressing higher, that signifies a Fed that is perhaps on hold longer than we'd expect.”
A sharp decline in the U.S. dollar has been supporting gold prices in what is the usual inverse relationship between the two. And, according to Gordon, a more dovish Federal Reserve will continue this trend.
A key level to watch for Gordon on the GLD chart is around $126, which he described as a “significantly technical area.”
Full story at Kitco