Something very telling has happened in the last three days of the gold market - this according to longtime commodities trader Vince Lanci, founder of Echobay Partners.

"The last three days have reconfirmed by commitment for a much higher gold price in 2018. We are making higher lows for the year - the recent behavior made me nervous, but something very telling happened in the last three days," Lanci said in an interview on Thursday.

"On Tuesday we had a short covering rally. And Wednesday there was a 10,000 contract increase in December - that's very unusual, that is an over 2.3% increase in open interest," Lanci explained. The point Lanci stresses is that gold is now back in a "safe area" between $1250-$1275 an ounce. "The $1,700 call I believe in is going to come to fruition- [if gold gets] above $1275 I will double down on a momentum bet."

Gold prices rose on Friday and were set for their first weekly gain in four weeks as uncertainty over the passage of U.S. tax reform pushed the dollar to a nine-day low against the yen. Spot gold was up 0.4 percent at $1,257.76 an ounce and set for a weekly gain of 0.8 percent. U.S. gold futures were 0.3 percent higher at $1,260.50 an ounce.

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This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

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