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It's not just bad economic data boosting gold, say strategists

Gold's gains this year may be more than just economic pains, say two strategists.

For those long gold, here's some good news: there's bad news for the economy.

A disappointing US jobs report sent gold UP 1% on Friday. What does that have to do with gold?

(Read more: Gold hits four-week high as US jobs growth slows)

One of the lines of thinking in the market goes like this: If job growth continues to disappoint, the Federal Reserve Bank may hold off on further tapering of its bond-buying stimulus program. Raised to $85 billion per month in December 2012, the Fed decided to taper it by $10 billion to $75 billion per month in December 2013.

But, tough economic data could mean the Fed will add more dollars into the financial system than expected had the data been stronger. More dollars means may mean more asset inflation and gold is traditionally considered an inflation hedge. That was part of the reason gold spiked up on Friday.

Added to the mix are a weakness in the US dollar, anticipation for an increase in gold demand in China just before the Lunar New Year, and reduced outflows in the SPDR Gold Shares ETF (the GLD), the world's largest exchange-traded fund for gold.

CNBC contributor Andrew Busch, editor and publisher of The Busch Update, believes that gold has yet another thing going for it: its technicals. Examining the GLD, Busch sees a recent double bottom in the charts – first in June and then in December.

"Back on January 2, I said buy gold or buy this ETF at $118," says Busch, based on his identification of the double bottom at the start of the year. The price of a share in the GLD is based on one-tenth of one ounce of gold with the GLD closing at $120.26 on Friday.

(Watch: Will gold make a comeback in 2014?)

Busch also sees another positive technical indicator for the gold ETF. "It looks like gold is going to move up enough were we're going to get the 10-day [moving average] moving through the 30-day," says Busch. "That's a nice buy signal."

However, Busch believes the GLD's upside is limited to $124 per share. "That was an old bottom that is now resistance on the topside," says Busch. "I expect it to top out around $124."

Steve Cortes, founder of Veracruz TJM, is also positive on gold, but that's because he believes the rest of the market is too negative on the yellow metal.

"Gold is relic of a bygone age," says Cortes. "I do not feel that there is any serious inflationary pressure right now. So, it's not surprising to me that gold had a terrible 2013. But, that said, there is so much negativity right now, and the bearishness is so pervasive on all physicals for that matter – not just gold – that I actually think that there is a viable bounce in order."

To see the rest of the analysis of gold by Busch and Cortes, watch the video above.

More from Talking Numbers:

The stock to buy on bad jobs data: Strategist
Why the Fed is making stores for the rich richer and low-income stores poorer: Strategist

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