×

The gold rally is 'doomed to fail': Strategist

It seems that gold is gaining ground.

The yellow metal has risen more than 5 percent in one month, after having hit its lowest levels in five years this summer.

Yet one strategist and currency trader says the recent gold rally is still "doomed to fail."

Boris Schlossberg, managing director at BK Asset Management, said the gains in gold are mainly attributable to investors' covering short positions as the Federal Reserve pushes back a rate hike. Once the Fed decides to raise interest rates, he said, gold's time to shine will be over.

"It just had a natural bounce because of that," Schlossberg said Monday on CNBC's "Power Lunch." "The moment we get an interest rate on the dollar, I think that gold starts to go right back down."

Schlossberg also said gold has benefited from a broader commodities comeback. Despite a 5 percent drop on Monday, crude oil has gained more than 6 percent in one month. Other metals such as silver, aluminum and platinum have also rallied in recent weeks.

Read MoreThe energy companies expected to see huge moves

However, with the dollar set to rise once the Federal Reserve makes its moves, "gold ultimately is still a sell on the rallies, and is probably going to be a decent sell at these levels," he said.

From a technical perspective, Rich Ross of Evercore ISI said the SPDR Gold Trust ETF (GLD), which has risen 5 percent in one month, should run into resistance at the $113 level. He said the outlook for GLD will remain bearish until it reaches around $118, a 6 percent gain from where the ETF closed on Monday.

"Above $118, all bets are off. But it's still a long way from here," Ross said Friday.


Want to be a part of the Trading Nation? If you'd like to call in to our live Wednesday show, email your name, number and a question to TradingNation@cnbc.com.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

Read more

Connect