Gold has risen for five straight sessions and is now positive on the year. And according to one top technician, the rally has just begun.
On Tuesday's episode of "Futures Now," Bank of America Merrill Lynch's head of global technical analysis, MacNeil Curry, said a near-term "correction" in the over the "next couple of weeks," paired with declining yields on Treasurys, should lay the groundwork for a sustained and sizable rally in gold that could see it break above $1,300 by the end of May.
"Rates are headed lower, and the dollar is likely to remain in a corrective sequence in general," said Curry. "Gold should rally in that environment."
According to Curry's chart work, gold has been in a "sizable corrective phase" since November 2014. But recently, the yellow metal has shown signs of life. Moreover, Curry points out that gold's inverse relationship to the dollar appears have broken down, which he interprets as another bullish sign for bullion.
"Gold has been on its own, really, since November," Curry said. He points out that in November, gold "went from $1,132 up to $1,307 and throughout that time, the dollar index actually rose from about 87.5 to almost 95."
Since gold is denominated in dollars, a rising U.S. currency often weighs on the value of bullion.
"The big thing here is that we're going to see continued breakdown in the negative correlation between gold and the dollar over the course of the next couple of weeks," Curry said.
The next important technical level that Curry said to watch is the 200-day moving average, which is around $1,238 per ounce. Beyond that, he sees bullion breaking out to $1,307 by May.
"If you look at the price action," he said, "it says gold should probably resume higher.