Gold added more than $15 per ounce this morning as silver climbed firmly above $34, an increase of 25 cents over yesterday’s New York closing price. These moves follow two bullish developments that have driven the dollar further away from its recent highs. As we predicted in our January 31st article, officials in Greece have agreed on terms set forth by EU and IMF regulators which will allow the fledgling nation to receive the next round of crucial bailout funds. The roughly $170 billion deal is designed to stave off a Greek default which would have turned the global credit market on its head sometime next month.

The news is helping prop up the struggling Euro, which has in turn driven the dollar down as risk appetites increased in early morning trading. Gold has responded by rebounding significantly and again testing the $1750 level. Some psychological resistance seems to be materializing around $1750 so a close above that level may indicate an upcoming test of technical resistance at $1765. From that point, there is precious little standing in the way of a renewed run at $1900 and a test of the previous all-time high.

Also bolstering gold demand was the news that the Bank of England is embarking on yet another round of quantitative easing, designed to further loosen credit conditions in the stalling British economy. Driven by fears that the Greek crisis will spill over and effect the fragile recovery in England, the British central bank has committed to buy another roughly $80 billion worth of government bonds. This move will bring the central bank’s total government bond portfolio to more than $500 billion, or over 20% of the nation’s annual GDP. The purchases will be funded by electronically created money.

Both of these new drivers for the gold market are appearing at a time when gold has already assumed a very bullish technical posture. The ratio of short to long positions in the futures market has tipped in favor of higher prices, and gold has broken cleanly out of its trading range below $1700. The most similar comparison we have for the current climate is that of the early summer last year. Gold went through a period of solid but modest gains between February and July of last year, when average prices rose from roughly $1370 to about $1570, a change of around 13%. Then, after a solid base was established, gold went on a two-month tear all the way up to $1900 and beyond, posting the best month over month performance in over 10 years.

Going into 2012, the picture is starting to look very similar. Beginning in December of last year, gold has been undergoing the same base building process, with steady and measured gains occurring almost every week. Prices have stabilized and grown by roughly 13% on the year, and are trending steadily upward. If last summer’s market is any indication, this long period of slow growth and consolidation in the gold market could mark the precursor to another record breaking run. The major short positions have been squeezed out of the market, and there is plenty of speculative money on the sidelines waiting for the buy signal. Once it comes, it will likely be game-on again for the gold market, so watch closely in the coming days.

Mike Getlin is Executive Vice President of Merit Financial, home to America's fastest growing physical gold IRA company. Please send comments or questions to meritprofiles@gmail.com.