Gold moved from the lower end to the middle of its current trading range last week. It closed the week at $1,737 per ounce. If this consolidation continues, it could provide support for more moves up in this bull market.

To determine when gold prices are likely to peak, it is helpful to look at the past inverse correlation between gold and the U.S. dollar. Previous highs in gold prices have been set when the dollar was in a bear market setting new lows.

Precious metals analyst Hubert Moolman reported this correlation in a recent article for Seeking Alpha, saying, “The 1980 and 2011 gold tops came close to the end of a downtrend of the US Dollar index. Also, it came just after the US Dollar index made new all-time lows in 1978 and 2008.

“This is what I would be looking for … before the next gold peak. If not a new all-time low for the US Dollar index, then at least a decent downtrend before calling a potential gold peak.

“If the current pattern continues to follow the ’70s pattern, then the US Dollar index is likely to decline significantly over the coming months and years, while gold makes new all-time highs.”

Rick Andrews is president of Avant Capital Management.