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Man who called gold's recent rally says the precious metal is going even higher

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Man who called the gold rally says the precious metal is going even higher

Gold is gleaming.

The precious metal is on track for its third straight month of gains and sitting near six-year highs as market watchers await a key Federal Reserve decision on interest rates.

And, if you ask trading expert Todd Gordon, founder of TradingAnalysis.com who called gold's recent rally on June 6, it looks it's poised to head even higher.

"The Fed is set to cut interest rates for the first time since 2008 with the market at all-time highs here, trying to continue the upward trajectory in economic growth. Gold has been a very good beneficiary, " Gordon said Tuesday on CNBC's "Trading Nation." "I see an opportunity to put another GLD trade on."

Gordon was referring to SPDR Gold Shares, the largest exchange-traded fund in the market that invests in physical gold. In late June, he predicted the GLD would pull back to near its mid-2016 highs — but when it didn't, it made him even more bullish.

"The pullback that I was looking for in that June 25 video to about [$]132 has not materialized, " Gordon said Tuesday as the GLD closed just under $135.

"All we've done is go sideways here, and if that's the kind of correction we want to have here in the gold market, fine," he said. "Sometimes prices can correct ... in terms of a drop, or we can just consolidate in time before you get the next move up and out."

That's why Gordon's next move wasn't pegged to any kind of weakness in the yellow metal.

"I think we need to just continue to buy strength and not buy corrective pullbacks here," the technical analyst said.

To do that, Gordon put on a bullish trade by way of a call spread. He bought the October-expiration $135 calls and sold the $145 calls, creating a $10 spread that cost about $2.28 at the time of his trade.

With the GLD near $135, that represented a bet that the ETF could climb to the $145 level by the end of October, a move of more than 7%.

Gordon also suggested cutting the trade short if the person buying it sees half of the trade's original cost — in Gordon's case, $1.14 — put at risk.

"We position-size here on these debit spreads such that if half of the premium you paid is eroded and the trade is not working ... let's go ahead, cut the trade and move on," Gordon said.

The GLD and gold prices themselves were mostly flat shortly after the market opened on Wednesday.

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