At the start of 2016, renowned fund manager and bond king Jeff Gundlach predicted Gold would surge to $1400/oz. That was quite the call considering Gold was still in a bear market. He reiterated his target a few days ago in a webcast. Gold closed the week below $1260/oz after reaching as high as $1287/oz following the ECB decision. Corrections in both Gold and gold stocks have been limited to swift declines lasting no more than two days. While we cannot predict the future, we think there is some chance that Gold could reach Gundlach’s target before a sustained correction.

Below is the Gold recovery analog chart or bull analog chart. We compare the current rebound to those from major lows seen in 1976 and 2008. By the way, it is great to be constructing bullish analogs rather than bearish analogs. As we can see, if this recovery in Gold continues to follow the path of those two recoveries then Gold could reach $1400/oz before correcting. The analog hints that if Gold reached $1400/oz then it could correct $100-$120/oz.

While Gold’s monthly and quarterly charts show very strong resistance around $1330/oz, its weekly chart argues that $1400/oz is the next major target after $1300/oz. In other words, if Gold can make a weekly close above $1300/oz, then it has a chance to run to $1375 to $1400/oz. Note that $1375 is the 38% retracement of the entire bear market. Initial resistance is $1300, which is the measured upside target from Gold’s recent, small breakout.

Note that Gold’s current net speculative position is 39% of open interest. While this appears bearish in the recent context of a bear market, Gold is now in a bull market. From 2001 to 2012, Gold’s net speculative position, when high, ranged from 50% to 60%. Moreover, the current net speculative position remains below 2014 to 2015 highs of 44% and 49%. If Gold wants to move above $1330/oz and towards $1400/oz, the current setup of the commitment of traders report won’t stop it.