Commentary: I’m not buying gold until this happens

A woman checks products in a gold and jewelery store in Corum, Turkey.
Umit Bektas | Reuters

It's been quite the golden run for the yellow metal.

On Tuesday, is rising as high as $1,345.50 per troy ounce — the loftiest level since September 2016.

But the big move came about a week ago when gold rose decisively above the $1,300 mark on Aug. 28.

A lot has been made about that break above $1,300 in gold — and rightfully so. After all, $1,300 was the level that halted rallies in April and June. So it really was no surprise that the metal rallied strongly once it finally broke above that key point of resistance.

At this point, however, gold is up nearly 12 percent from its early July lows. Simply put, it has become overbought on a near-term basis, which makes it ripe for a near-term pullback.

Once the yellow metal can work off this overbought condition, we'll have to see if gold can rally further. If it does, the next resistance level will be the $1,365 to $1,375 range.

Why? Because $1,365 was the closing high from 2016 — and $1,370 is the intraday high from last year. Also, once it enters that range, it will have retraced 38.2 percent of the sell-off from gold's 2011 highs. That number might sound random, but it is one of the "Fibonacci retracement" levels. As the technical analysts will tell you, these mark places where charts tend to turn around.

Therefore, any meaningful break above $1,365 and then $1,370 will be even more bullish for the gold. Otherwise, look for a bit of a give-back in the days and weeks ahead.