Gold surged higher after the US September nonfarm payrolls came in much weaker than expected, says Thomas Light from Faraday Research.

Looking at the daily chart, Light says gold posted its strongest day this year on Friday after the US jobs report came in at 142,000 versus the expected 200,000.

According to Light, the chart signals that gold could be heading up into the USD 1,160 resistance area.

Zooming into the hourly candle chart, he says the market is consolidating within a tight flag formation, adding that the fact that the market’s holding near its highs is a very bullish sign.

Light is looking to buy a breakout above the flag as this is likely to trigger a new trending move higher. His stops on the trade are below the bull flag with targets coming in near resistance at $1,156.