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Gold could skyrocket to $2,000, but don’t buy now, trader says

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Gold is on a tear this month.

The precious metal is up 11% in April, its best month since 2011, and has reached levels not seen in nearly eight years.

Bill Baruch, president of Blue Line Capital, says its technical setup suggests even more upside.

"I love gold, and you need some in your portfolio," Baruch said Tuesday on CNBC's "Trading Nation." The charts show "an inverse head and shoulders pattern β€” a beautiful technical pattern that played out through March into April and we're now breaking out above. It broke out above it."

An inverse head and shoulders pattern forms when an asset makes a low, a lower low, and a higher low – it implies a bottoming and change in trend direction.

"I do believe gold over the rest of this year will get to $2,000. I think it should be in your portfolio. The massive liquidity injected by the Federal Reserve, it's going to support asset prices like equities, but it's also going to support gold," said Baruch.

Even with momentum behind it, Baruch is not willing to chase gold here. Instead, he sees opportunity in case of a pullback.

"There's higher to go, but look to a move back to $1,700 as your buying opportunity," said Baruch.

A move to $2,000 represents 13% upside and would take gold to record highs. A decline to $1,700 implies a 3% pullback.

Steve Chiavarone, portfolio manager at Federated Hermes, argues the opposite. He says the rush to safety assets such as gold could fade as markets stabilize.

"Gold has no cash flow. So, you're just trying to understand what the demand is going to be and that's a bit of a gamble. I think it's logical that gold has done well here, given that economic growth fell off the cliff. You've had unprecedented stimulus by central banks and uncertainty is high, but we think now we're starting to head into a period of healing," Chiavarone said during the same segment.

Gold prices have risen 15% this year as the S&P 500 fell 12%. However, on Tuesday, as gold ended slightly lower, the S&P 500 ended up 3%.

"We're looking towards and forward to the eventual recovery. We think over the long run, quite frankly stocks are a better bet here than gold," he said.

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