NEW YORK ( TheStreet) -- Spot gold prices traded higher on Tuesday. As of this writing, spot gold is quoted at $1586.30.
The precious metal saw a nice pop higher after the U.S. dollar index ($USDX) sank while the euro rallied to the highest level since the first week of March. In addition, it is quite likely that additional shorts in the market have elected to throw in the towel, thus helping drive bullion prices higher.
Although the dollar bulls remain largely in control, the dollar index is in danger of rolling over. Should this occur, it will likely give gold a much-needed boost to gain more upside technical momentum.
Demand for physical gold appears to remain robust as investors look at recent weakness as an opportunity to add to physical holdings while gold is "on sale."
From a technical standpoint, the gold bears are still in the driver's seat, and bullion bulls need to produce a solid close above $1,600 to attract fresh buying interest. Currently, spot gold is just shy of its 20-period exponential moving average (EMA), which comes in at about $1,588. Should the market take this out to the upside, it sets the stage for a test of $1,600. The bears need to take out support at last week's lows to confirm further weakness.
The market will be paying close attention to Ben Bernanke and the FOMC minutes tomorrow. The minutes may give clues as to the Fed's timeline on a potential removal of stimulus, which could move gold prices. As discussed previously, gold remains a range-bound market in the grand scheme of things until proven otherwise.
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This article was written by an independent contributor, separate from TheStreet's regular news coverage.