After an initial surge early in the year, prices have been stuck in a sideways range. But one trader expects the metal to see a sharp move in the next few weeks.
"I think that the floor for gold is gone and it's just waiting for that push to get us to a technical breakdown," technical analyst Todd Gordon said on CNBC's "Trading Nation." "We want to be short gold."
Gordon noted that on a long-term, monthly basis, gold has been trading along uptrend support. "We had touch points on that trend-line in 2002, 2003, 2004 and again in 2005," said Gordon. "But most recently we've come back to support and rather than move higher, we've quietly snuck below it."
But what troubles Gordon even more, is a bearish double top that has formed on the daily chart. Technicians often look at double tops as a sign that a stock could go lower. "This is going to serve as resistance," said Gordon, founder of TradingAnalysis.com.
So to set up a bearish bet on gold, Gordon looked to the options. Specifically, he bought the July 115/110 put spread for $1.90.This is a strategy that entails a trader buying a higher-strike put and selling a lower-strike put to offset the cost, and Gordon's trade becomes profitable if the GLD falls below $113.10 by July expiration
With the strong dollar, added Gordon, gold is sure to continue to trend lower. Either way you slice it, "I think that gold is going to drop," he said.
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