For gold bugs, it can't get much worse.
A brewing currency crisis and nascent signs of inflation — typically bullish catalysts for bullion — have failed to give gold much of a boost in 2018, having fallen 8 percent this year.
But one longtime chart watcher says that is about to change.
According to FactSet, the commodity just posted its third-straight positive session, the longest winning streak since April, and TradingAnalysis.com founder Todd Gordon says a key reversal in the dollar is about to send the metal even higher.
"[Gold shorts] are starting to cover," Gordon said Tuesday on CNBC's "Trading Nation." "Part of the reason why they're starting to cover is [because of] comments from President Trump" discouraging the Fed from raising rates.
"We're starting to see a reversal in that dollar rally, which has been precipitated by the outlook of higher rates as well as pressuring that gold market," Gordon added. "So we're starting to see a bit of a reversal" in gold.
Gordon believes the dollar drop will continue, and therefore he wants to be long GLD. He sees a base of support forming at around $111 and $112.
As a result, Gordon wants to sell the September monthly 113-strike put and buy the September monthly 111-strike put for a credit of 77 cents, or $77 credit per options spread.
If GLD were to close above $113 on Sept. 21 expiration, then Gordon would make the $77 credit on the trade. If GLD were to close below $111, then Gordon would face a maximum loss of up to $123.
The trade: Gordon is suggesting selling the September monthly 113/111 put spread in GLD for about $77 credit per options spared.
Bottom line: Gordon sees GLD rallying above $113 on Sept. 21 expiration.