How the Price of Gold Could Be Getting an Even More Bullish Catalyst

The price of gold consolidated again last week, but that stage of the climb might already be over. If the "golden staircase" pattern continues, gold prices could jump higher again soon.

Gold spent January like a lion, then entered February like a lamb. But momentum and interest have been building for the asset.

Early last week, gold rallied to a 10-month high, hitting my most recent target before dropping back. But even that retreat was short-lived as bargain hunters stepped in.

What's more, after two mega-mergers in the gold space in the last four months, Barrick Gold Corp. (NYSE: GOLD) says it's considered a possible merger with Newmont Mining Corp. (NYSE: NEM).

And that has the sector abuzz.

With U.S. growth likely slowing, the newly dovish Fed is going to be very hesitant to hit the brakes via rate hikes. In fact, its next move may even be back to the gas pedal via rate cuts.

As it turns out, consumers looking out five to 10 years have lowered inflation expectations to 2.3%, equalling the lowest level on record. Even some Fed insiders have argued inflation should be allowed to overshoot 2%.

Once real interest rates head back toward zero and below and inflation outpaces yields, gold prices will soar.

Here's what happened with gold prices last week - and why I'm still bullish in my latest gold price prediction...

The Price of Gold Built Even More Momentum

Gold started roaring back this past week, hitting a 10-month high and my latest target at $1,340.

That means it easily surpassed January's high of $1,320, my previous target.

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Tuesday's (Feb. 19) action was explosive, certainly helped by a big retreat in the U.S. Dollar Index (DXY). The dollar sold off, and the DXY dropped from above 97 to below 96.5 in a matter of hours, powering gold to $1,340 by noon. The dollar stabilized and the DXY remained near 96.5 while gold did the same and closed at $1,341.

Gold opened slightly higher on Wednesday (Feb. 20) at $1,343, peaked at $1,346 at noon, and then saw profit-taking set in as it dipped back to close at $1,338.

Here's the dollar's action in the form of the DXY for the past week:

On Thursday (Feb. 21), unsurprising profit-taking emerged in gold, aided by a bit of renewed dollar strength. The DXY regained 96.6 while gold fell back to close at $1,323.

But that didn't last long, as bargain hunters bought the dip on Friday (Feb. 22). The DXY dropped back below 96.5, while gold rallied to $1,330, a level it held at mid-afternoon.

That's actually great news for the price of gold.

In fact, it puts gold on the trajectory to hit my latest gold price target...

Why My Gold Price Prediction Remains Bullish