Gold can get to 5 year highs if it can clear one technical hurdle: Bank of America

Gold just ended its third straight week in the red, as investors rediscovered their love for a different safe-haven asset: the U.S. dollar.

The DXY dollar index ended Friday at $92.61 on Friday, its highest level of the year. The index has climbed by more than 1 percent in the past week. Meanwhile, gold prices are down 0.8 percent for the week, ending Friday at $1,314.80 an ounce.

However, the yellow metal will find favor again, according to Bank of America Merrill Lynch technical strategist Paul Ciana, and a breakout could push it to recapture highs not seen in half a decade.

"Gold prices have been forming a six-year long base," Ciana told CNBC's "Futures Now" this week. "In the technical world we like to say, the bigger the base, the higher in space. That's what gold is doing."

Gold prices need to break through the resistance level at $1,350 to $1,375, which would then confirm the six-year technical base and set up a larger rally, he said. Prices moved as high as $1,369 in mid-April, but have failed to crack $1,370 so far this year.

"As soon as this $1,350 to $1,375 area goes, which I do think it will later this year mostly when the dollar rally kind of tempers itself and neutralizes, that puts gold on the path to $1,450 so plenty of room there," said Ciana.

Gold prices have not traded at $1,450 an ounce since May 2013. The precious metal has been in a years-long downward trend, holding below $1,400 since September 2013.

A rally in gold is part of the "bigger picture" of what's happening inside the commodity markets, Ciana continued. He sees a secular commodity bull market in formation.

"If we look at the CRB index, our monthly chart, which is essentially the rising tide of commodity markets, they just broke out ending April," Ciana explained. "They've closed just above $200, confirming an ascending triangle base."

This breakout sets up the commodity index for another 20 percent move higher over the next year or two, Ciana forecasted.

Even as a rising U.S. dollar has inflicted pain on gold prices in recent weeks, Ciana told CNBC that historical data shows that both assets could work their way higher together.

"When U.S. financial conditions are tightening, like they are today, compared to 2015, very early 2015, gold prices actually rallied about 12 percent and the dollar index had rallied about 6 percent," explained Ciana. "There are situations where they both can move in tandem for a short period of time."

Those symbiotic moves don't last, though, and the inverse correlation eventually kicks back in, he added. In this case, he predicts a divergence to bring about higher gold prices and a neutral to lower dollar.

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