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Gold Setting up for a Strong Rally to $1,560 per Ounce

Double Bottom on Weekly Chart of Gold Pointing to $1560 Price Target
Double Bottom on Weekly Chart of Gold Pointing to $1560 Price Target

Gold has rallied strongly since the start of 2014 and it might be heading to $1560 per ounce this year. Currently, gold prices are $1,359 per ounce which is just above levels seen nearly 4 years ago. Political uncertainty and the unwinding of the stimulus program should propel gold prices higher. CNBC Talking Numbers Global Technical Strategist Richard Ross had this to say, "We've been very bullish here on the US, but we're seeing things are getting a little dicey out there from a global standpoint. Emerging markets are on the ropes right now. You're seeing what's going on in Russia. Even in Europe, the momentum is slowing. All of that continues to favor gold."

Ross went on to forecast a move to $1,420 per ounce and potentially rallying as high as $1,560 per ounce. CNBC contributor Andrew Busch agrees with the $1,420 target, but doesn't think prices will go much higher and depends largely on what happens at the FOMC meeting on Wednesday.

Looking at a weekly chart of Gold, it becomes clear how Ross came up with a $1,560 price target. The weekly chart has recently completed a more than 9 month double bottom. The price target of the double bottom pattern points to around $1,560 per ounce. Investors looking to capitalize on this potential 10% gain should buy on a breakout over $1,400 when this double bottom is confirmed. There is also a pretty strong layer of resistance at this level that would likely stall the rally. Weekly charts are pretty slow moving so it may take many months before this price target is actually realized.