Speculation about an interest rate hike is making the rounds, but one trader isn't believing the hype — and that has him making a bet on gold.
Todd Gordon of TradingAnalysis.com believes that the Federal Reserve is afraid of market volatility and therefore won't raise rates this month. As a result, Gordon sees gold as the commodity to trade.
Gold prices have an inverse relationship with interest rates. As interest rates rise, non-interest-bearish assets like gold become less attractive in comparison. In addition, a rate hike would send the dollar higher, hurting the value of bullion in dollar terms, as it would take fewer more-valuable dollars to buy the same amount of gold.
Monday on CNBC's "Trading Nation," Gordon looked at a chart of the gold-tracking ETF GLD and pointed out that GLD has been trading in a range all summer, saying that the $124 level is now acting as the ETF's support. From this level, it is set to move higher, in his opinion.
"While we're above the $124 mark here in the GLD, I think it's a buy and we could move out of the range in the gold market," added Gordon.