Unable to get a bid, gold is going to $900: Technician

The U.S. dollar posted its biggest one-day loss since 2009 on Thursday, falling more than 2 percent after the European Central Bank announced lighter monetary stimulus measures than expected, which boosted the euro but hurt the dollar. However, gold only saw a slight bounce, which may have left some investors wondering — where's the gold rally?

Since gold tends to trade inversely to the U.S. dollar, a notable drop in the currency would translate into a boost for the yellow metal. But Andrew Burkly, head of portfolio strategy at Oppenheimer, said the big currency move mainly had to do with adjusting for short positions.

"It's really a positioning adjustment," Burkly said Thursday on CNBC's "Trading Nation." "There's such a big short position in the euro that really anything the ECB did this morning was going to be a bit of a disappointment."

Gold, which is widely considered an inflation hedge, has yet to become attractive to investors, Burkly said. Thanks to low oil prices and sluggish economic data, inflation doesn't look like it's going to be picking up anytime soon, he said.

Read MoreJanet Yellen takes issue with Citi's recession call

The beaten commodity also tends to act as a safe-haven investment in times of volatility and uncertainty. Although the CBOE Volatility Index, a commonly used "fear gauge" for the market, saw a sharp jump on Thursday, Burkly said that still isn't enough to make investors move into gold.

"On a short-term basis you're going to have those correlated moves, but I think people have gotten burned by that quite a few times," Burkly said. "The trend in gold just continues to go down and down, as the trend in inflation continues to go down and down as well."

According to technician Craig Johnson of Piper Jaffray, that downtrend in gold could take prices as low as $900 per ounce, the next level of technical support.

The fact that gold didn't see a bigger bounce, Johnson said, is indicative that a longer-term disruption isn't happening in the market.

"The trend is clearly not your friend on this particular chart," he said Thursday on "Trading Nation." "I remind the gold bugs that the average price of gold over the last 50 years is just under $500. So I think there's more downside yet to be had."

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.


Trades to Watch

Trader Bios


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.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more