NEW YORK ( TheStreet) -- Gold is trading higher again today, with futures for April delivery up $9.70 per ounce at $1593.30.
Gold is benefiting as a safe haven as the prospects of another Italian election weigh on markets. The potential of an anti-austerity party taking control and what it might do to the euro are definitely a cause for concern.
In addition, the U.K.'s credit rating was downgraded on Friday by Moody's and, as a result, the pound has been under pressure since then. The bottom line is: The eurozone debt crises is rearing its ugly head.
As if these developments weren't enough, automatic spending cuts slated to take effect in the U.S. on March 1 have investors and traders on edge as well. It certainly now looks as though the stock indices have put in a near-term high. Bonds and notes rebounded furiously yesterday, which is indicative of the "risk-off" mentality that has come into play recently.The dollar has maintained strength, while the euro continues to head lower, approaching the key 1.30 area. Gold may have more upside to go. In addition to the factors listed above, gold had become seriously oversold on a short-term technical basis. It seems as if everyone jumped on the "short" bandwagon. That could indicate that a squeeze is on and, as more of those shorts are squeezed out of the market, prices could easily test the mid-channel area or even the breakdown area of around $1,640. First and foremost, let's see if gold can close above the psychologically important $1,600 level today. That would, in my opinion, set the stage for continuing upside momentum.