February 25, 2013 – Gold climbed by one percent on Monday as Wall Street posted losses and investors anxiously anticipated the outcome of Italy’s parliamentary election, Reuters reported. This is the third day that gold bullion has rallied and risen, climbing near $1,600 an ounce.

Today, the S&P Index fell almost two percent, and contradictory forecasts caused investors to fear that Italy’s parliament may be divided, once again throwing the debt-laden country into disarray and threatening the stability of the Euro zone and the Euro currency itself.

Investors are awaiting Federal Reserve Chairman Ben Bernanke's semiannual testimony to Congress later this week, expecting insight on its continuing plans for the U.S. economic stimulus. Analysts believe that indications that the Fed might curb its asset-buying program led to the dip in the market price of gold bullion.

"Clearly, gold could be going up ahead of the Bernanke testimony tomorrow. And gold has had quite a wash-out, so on a relative basis it is more attractively priced than other assets," commented Axel Merk, chief investment officer of Merk Funds. Merk manages $630 million in mutual fund assets.

In addition, $85 billion in across-the-board government spending cuts are anticipated to take effect on Friday, March 1, as part of the economic sequestration. Many doubt that Congress and the White House can reach a resolution that will spare the sequestration.

With reports on consumer confidence, including the release of the U.S. S&P home price data on Tuesday, analysts believe that gold may be experiencing a resurgence.

"Gold had a 'near-term bottom-out' here. We had a steep selloff in the last few weeks," said Ron Florance, managing director of investment strategy at Wells Fargo Private Bank. "We think there is a near-term opportunity for a bounce up."

As hedge fund and money managers cut their net long gold futures and options positions, analysts began to anticipate the precious metal would rebound.

"The fact that net longs are now relatively small suggests plenty of scope for a renewed surge in buying, including short-covering," stated strategists from Capital Economics in a note.