Posted by Adam English - Friday, September 21st, 2012

Gold has gained nearly $200 – or 10% – in the past four weeks, it is $20 away from its 2012 high of $1,790.30 and it's about to break out again.

Although gold prices remained flat yesterday, there is a great reason to stay on board for greater gains ahead.The best truly is yet to come... here's why:

With a crossover between the a shorter and longer-term moving average, gold prices just formed a “Golden Cross” yesterday. The 50 day moving average ended the day at $1,650 and the 200 day moving average was at $1,645.

The technical indicator signals a strengthening bull market. Quite often, the longer-term moving average becomes a key point of resistance when bullish trading subsides.

As Adam Sarhan of Sarhan Capital stated: "Given shorter-term moving averages have all turned higher in recent weeks and the bullish price action recently, this golden cross today is an additional indicator of strength in an already strong market,"

The last time a Golden Cross formed was on Feb. 6, 2009, and gold prices consequently rose 11% over the next 11 trading days.

The Federal Reserve's QE3 announcement last week and loose monetary policies from other major central banks, especially the ECB, have renewed interest in gold's appeal as an inflation hedge and spurred a buying frenzy.

While we cannot truly predict where gold will go from here, there is no doubt that the economic climate is perfectly aligned for a continued gold rally, pushing gold prices up to a brand new height for 2012.