Keep buying gold as long as it’s above this key level: Bill Baruch

Gold has stumbled during the past month, but that hasn't made me any less bullish on the precious metal.

The commodity has quietly fallen off the radar as it slipped by as much as 5 percent from its peak one month ago.

I view this move differently from the rest of the market.

Instead of a bearish trend, gold has built a constructive chart pattern above the psychological $1,300 mark. The 10 percent spike through December and January has allowed the consolidation over the last 90 days to build a longer-term bull-flag.

At its highs, gold was overbought and the long trade was overcrowded. This minor correction has relieved both of these technical indicators.

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I watch the CFTC Commitment of Traders closely to understand if there is room for buyers. If everyone has already bought, this means a market is less likely to see fresh buying.

The net-long positioning in gold has dropped by 80 percent from its peak in January and is now at the lowest level since July when gold began a 13 percent rally into September.

Last Thursday, gold convincingly closed back above its 200-day moving average for the first time in two weeks, a level that provides tremendous long-term value.

I like being long gold until a close below the psychological $1,300 mark. If it can get out above resistance at $1,327, I imagine those buyers will quickly come back to the table.

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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.

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