Gold is going back to its recent highs: Technician

Investors shouldn't get too worried about the recent pullback in gold, according to Todd Gordon of TradingAnalysis.com.

As gold closed out its worst week of 2016 last week, Gordon said prices should be bolstered by key technical support, creating an opportunity for investors to buy. Additionally, he believes that inaction from the Federal Reserve will drive gold prices higher as investors expect lower interest rates.

"I don't think the Fed is going anywhere, which makes the gold market a buy on this pullback," he said Thursday on CNBC's "Trading Nation."

Looking at the gold ETF, GLD, Gordon sees support near its previous highs from October, between $115 and $117.


To capitalize on his thesis, Gordon is looking to buy into GLD once it reaches $115, another 1 percent drop from where the ETF closed on Thursday. "I'd like to wait for the market to pull back a little bit more into this zone of support," he said.

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Once GLD reaches $115, Gordon recommends buying the May 115-strike call and selling the May $120-strike call for about $2.25 per share. This is a strategy known as a bullish call spread, and it will provide exposure to gold's gains between $115 and $120, although it is only profitable if GLD closes above about $117.25 upon May expiration.

"We're just going to look for a retest of the highs. If we're going to break out to new highs, we can take that as a next step trade," he said.

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