A gold ETF just did something it’s never done before

Don't look now, but one large gold exchange-traded fund just did something rare.

As investors were consumed with bitcoin's price action in December, many missed the strong rally in gold. The SPDR Gold Trust ETF (GLD) just snapped its longest winning streak ever. It rallied for 11 straight days before dipping into the red on Wednesday, marking its longest string of positive sessions since its inception in 2004.

Of course, part of the reason for the recent rally is heightened geopolitical concerns, with unrest in Iran and the continuing issues with North Korea.

However, for the first time in a very long time, the expectation that inflation will become more pronounced in 2018 is also giving gold a bid.

Not only have we seen data that show an improving global economy, but more importantly, we are also seeing a rise in commodities. We all know about the rise in oil prices over the past six months, but many other commodities such as copper have jumped as well, and that's worth watching.

The CRB Commodity Index is now testing a very important resistance level: its highs from mid-2016 and early 2017. If that index can break above that line in a meaningful fashion, it will raise the odds that we'll see a kind of rise in inflation that's been absent for many, many years.

I do have to admit that gold and other commodities are getting overbought on a near-term basis, so any "breakout" move may not come immediately. However, if gold and the GLD can break above their 2017 highs of $1,350 and $128, respectively, it would give them both a bullish "higher high" and take the GLD above a "symmetrical triangle" formation. This would bode quite well on a technical basis.

Again, there has been a ton of talk about bitcoin and other cryptocurrencies recently that's said to detract from gold trading. However, if inflation does indeed pick up as we move through the first few months of 2018, it should be quite positive for the "old reliable" inflation hedge: gold.

The GLD looks like it has a lot of potential in the New Year.

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.

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

Connect