As gold hit the highest level in nearly two years, one technical analyst is certain that major gains are in store for the precious metal.
“Gold is going to $1,450,” Zev Spiro said on “Futures Now” on Thursday, a day on which gold rose as high as $1,318 before retreating back below $1,300. Gold was around $1,296 on Friday afternoon, up about 1.5 percent this week and on pace for its third positive week in a row.
“Once we get to $1,306 to $1,308 and hold, I suspect we can push higher within two to three months.”
Spiro looked back to March, when prices moved above what he described as a two-year long descending channel. At that time, “the breakout signaled higher prices with a minimum price objective in the $1,450 area,” he said.
He also explained that prices could extend beyond this minimum objective to test the $1,525 to $1,550 area, “which was a level of support from 2011 to 2013, that is now overhead resistance.”
Ultimately, Spiro believes the landscape for gold remains positive because of the sell-off in May, when prices tested and held above a key range of $1,190 to $1,205.
“The hold of that support reinforced significance of the $1,190 to $1,205 level and it led to the sharp rally we’ve seen over the past two weeks,” he said, noting that gold prices have rallied nearly 7 percent in June.
Spiro also said gold moved above a key level of resistance that’s formed by connecting the highs from January and May, when gold prices surpassed $1,308 and $1,306, respectively.
“If we get a hold above $1,306 to $1,308, that would confirm a breakout above this level, which would be positive and signal a continuation of the larger uptrend,” he said.
Spiro also said that in the coming weeks, “digestion” of a rally is healthy, and that there may a brief short-term consolidation before a breakout.