Cramer is 'spot on' about buying gold, technician says, and it could add another 10%

Gold is getting its shine back.

The traditional safe-haven asset has rallied more than 3 percent this month, as investors sought shelter from a volatile stock market. The surge has even prompted praise from Mad Money's Jim Cramer for gold's "bull market."

Market uncertainties such as trade tensions and other geopolitical worries tend to increase demand for safe-haven assets, gold being one of them. As trade war tensions have peaked over the last three months, gold prices have risen 6 percent.

And the rally could be just getting started, according to Craig Johnson, chief market technician at Piper Jaffray.

"Cramer's spot on correct," Johnson said on CNBC's "Trading Nation" on Friday. "It looks like we're putting in a bottom here and it looks like we're going to see this maybe 9 to 10 percent higher to get back to the old highs."

On the GLD gold index, a 10 percent rally would take the exchange-traded fund (ETF) to new 52-week highs. It would also mark its highest level since August 2016.

"From our perspective I think we could see some weakness in the dollar in here given that the [Federal Reserve] might be less hawkish going forward, and that might be really the underlying driver higher as to why we'll see the gold prices go higher," said Johnson.

The U.S. dollar and gold prices typically have an inverse relationship, in which one falls as the other rises. Bullion tends to get a bid when the greenback falls, as it becomes a cheaper commodity to investors trading in other currencies.

However, not every market watcher is as enthusiastic about the gold trade. Erin Gibbs, portfolio manager at S&P Global Market Intelligence, said the gold rush may be fading.

"I don't see it ending just yet, perhaps not before the end of the year but certainly as we get into 2019," Gibbs said on "Trading Nation" on Friday. "A lot of the concerns that we have – tariffs, Brexit and so on – as those dissipate and we really start looking at the fundamentals again, this could very swiftly be undone."

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