Gold is nearing what could be an ultra-bullish key level

Gold's relationship with inflation expectations has gotten interesting lately, and I'm watching one key level for gold in particular.

Consider this conundrum in the gold market: The metal has traditionally been a good hedge against inflation, but it hasn't seen much demand lately even in the face of rising inflation fears. It's not like gold hasn't rallied, of course; it's up a little over 6 percent since mid-December.

Still, the yellow metal hasn't broken out.

In fact, it has tested key resistance of $1,375 per ounce, but it hasn't managed to break above that level. The $1,375 mark was the metal's highs from both 2016 and 2017, so a break above that line would give gold a technically significant "higher high."

Furthermore, that level is the top line in an "ascending triangle" pattern, so a break above that level would prove quite bullish on a technical basis.

This is particularly true because gold has already broken above its six-year trend line, going all the way back to those 2011 highs.

Of course, we always have to wait for an actual break of this key resistance level before we can declare anything. Still, investors should consider that any meaningful break above $1,375 would confirm that the multiyear downtrend has reversed.

Gold on Thursday was trading modestly higher, at $1,332 per ounce.

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.


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.

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