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Dennis Gartman: Gold is going 'several hundred dollars higher'

The selloff in gold has run its course, and the precious metal is set on an upward trajectory, Dennis Gartman the closely followed commodities trader and founder of The Gartman Letter, told CNBC.

"I had been agnostic and modestly bearish of gold until about three and a half weeks ago," Gartman told "Squawk on the Street" on Tuesday. "Then I wrote what I call 'a watershed commentary' that gold was going to go several hundred dollars higher.

"I continue to be bullish on gold, and I think [it] is going higher," he said. "I'm not a gold bug. … Gold is nothing more than another currency. It's to be crossed against other currencies. I think in the circumstances that prevail right now, gold wants to go higher."

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Gartman said that he's 'especially bullish' on gold in yen and euro terms because of moves made by the world's major central banks, which are looking to expand reserves. "It's not a new story, but it's having an effect."

In addition, he said, since the public has been liquidating gold positions, that process has likely run its course, as demonstrated by gold's recent move up.

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Gold has also broken above several technical levels in the past few days and "given none of that back—I find that impressive," Gartman said. It also is experiencing backwardation (in which the expected spot price is below the price of a futures contract), a situation that he said supports his bullish thesis.

"That's a market that tells you the demand for that commodity is strong," Gartman said. "It's actually asking for that commodity to come out of storage," he added, pointing out that crude oil is also experiencing backwardation.

(Flashback: Dennis Gartman on gold: 'Buy more')

"I don't believe that there is a conspiracy out there to tighten the supplies of gold. Supplies of gold are simply tight. ... There's [also] not a conspiracy to tighten the supplies of crude oil. Demand for crude is strong, even relative to the supply that we have. The economies of the world are strong, and that's where you get a backwardation," he said.

"The market is what the market is," Gartman said. "Let's respond to that. Let's understand that and let's move on."

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul

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