NEW YORK (Kitco News) -- Is a major upside number for gold in the cards? Or is the choppy action making investors wary?

In the first trading day of February, gold has once again topped the $1,122 chart point. The metal is currently trading near a 3-month high. It has been a good start to the year for gold, with the market up nearly 6% in the past month.

'You want to express a major upside number for gold but the choppy action makes investors wary,' said Kitco Metals' Global Trading Director, Peter Hug.

Speaking with Kitco News, Hug added, 'A scenario similar to 2008-2011 may yet develop but I cannot in good faith just throw out an absurd upside target. The cross-currents in the market continue to suggest upside momentum for gold, but the move is likely to be jerky.'

Hug explained that it is definitely a technical market for traders but in the current environment, a core position for investors is key.

'Fundamentals line up for a higher gold price. The moon shot may be coming, but if you do a reality check, what will that mean for your other assets: home values, 401 k, and your job? Hold gold as an insurance play and hope you don't need to cash in the policy.'

Gold futures managed to hit fresh highs Monday, rallying to levels last seen in early November. April Comex gold futures saw a 1% gain Monday, settling the session at $1,128 an ounce.

'I consider the current market constructive. But, as I've mentioned, this is a trader's market and technical levels need to be taken out. This is not going to be a straight move,' he said. 'Currently, the weakness that I continue to expect in global equity markets and in oil...indicates to me there's a good fundamental case to be made that gold has higher to move.'

Looking to silver, which has also gotten a boost on the first trading day of February, Hug said there may be a profitable gold-to-silver ratio play for traders coming.

'When I see silver approaching the 80:1 ratio with gold, it's happened a couple of times over the last two years, my trading instinct would be to short gold and go long silver on a ratio play,' he said.

'So far, both times that maneuver has been employed, it's proven to be very profitable,' he added.

Monday, prices pushed to levels last seen in early December, with March Comex silver futures settled the session with a gain of 0.72% at $14.343 an ounce.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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