"Options activity has been highly elevated in the GLD," CNBC contributor Michael Khouw said Friday on"Options Action." Khouw noted that a number of traders bought the April 145-strike calls for 60 cents on Friday, a bet that the GLD will rise approximately 18 percent to $145.60 by April expiration. "Until we develop the 'gas, guns, and grains' index, gold represents the ultimate fear trade," Khouw said.
Sterne Agee's chief market technician Carter Worth also sees more room to run in gold. "I think what's important is that as the dollar has appreciated and appreciated and other commodities have [broken down] gold has not budged in the past year. It has held in there," said Worth. "Of course, it's come to life in an aggressive sort of way."
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How much higher? Worth pointed to gold priced in foreign currencies for clarity.
"One 'tell' as to where gold likely is headed can be gleaned from examining the chart of gold bullion denominated in euros rather than U.S. dollars," he said. "Gold in euros breached its down trendline three months ago," he added. "The message is the same when one looks at gold in Swiss francs and denominated in British pounds."
Technicians often look for breaks in trendlines as confirmation for a move in a particular direction.
Said Worth: "Early momentum usually begets further momentum and the presumption is meaningfully higher prices."