This week we look at an important chart on the gold price outlook as a number of key themes and indicators are starting to shift for gold, and commodities more broadly for that matter.

The chart shows speculative futures positioning in gold tracking back up to the long term average, and gold approaching a critical resistance point.

Specifically, the red line is non-commercial or speculative futures positions standardized against open interest. This indicator went from substantially oversold late last year, to now back around its longer-term average. This is important because what we are witnessing here is a clear turnaround in sentiment and at this point, the signal is bullish momentum, rather than a contrarian bearish signal (which may be triggered if positioning became stretched to the upside -- not yet though).

The other key aspect of that chart is the blue line. The 1380 resistance zone has been clearly established now, and a break out above this point could well clear the path for a new bull market in gold (after an almost 8-year bear market). On that note, we've already seen a tentative upside break of the downtrend channel (not shown), and a large pickup in ETF flows. So I don't want to get ahead of myself, but it's certainly looking interesting.

While my valuation indicators still show gold as expensive, a number of old headwinds are starting to turn: the Fed is on hold and may pause QT (a headwind for gold); real yields have stopped rising (real yields and gold tend to move inversely); the USD bull run is likewise on hold, and the supply imbalance (excess supply on our metrics) is starting to improve.

So as old headwinds begin to turn and key technical levels come into focus, gold could well be on the cusp of a new bull market. Time and price will tell.