NEW YORK (TheStreet) -- Gold prices were slightly higher for a while on Tuesday, climbing 0.75%, but then dropped again to close at $1162.90. The yellow metal currently trades at $1,163 per ounce as of Wednesday at 10 a.m., which is below the previous low of $1,180, a level that that many traders thought would act as support.
Until gold can climb above the "congestion zone" between $1,180 and $1,250 per ounce, it will be hard to say that a bottom is in, according to Kottke Associates' Bill McCarthy.
As the Japanese and European economies continue to struggle, the central banks are being forced to engage in monetary policies that will jumpstart economic growth. As a result of this stimulus, the euro and yen become devalued.
As these currencies continue to decrease in value, more and more foreign investors are putting their money in U.S. dollars, as well as the U.S. stock market. For this reason, gold prices continue to struggle gaining upside momentum, McCarthy explained.
In particular, Japan has continued to initiate stimulus programs in order to debase its currency due to fears over deflation. The country's goal is to spur inflation, but it's unclear how much longer this type of monetary policy can continue, he added.
Gold prices, which are down 9.3% in the past year, have struggled since July. In March, the metal ran as high as $1,391 per ounce, before declining and remaining rangebound between $1,250 and $1,325. The 52-week low is at $1,130 per ounce.