Gold Faces Crucial Test at $4,484

Gold prices are approaching a crucial test after a strong rebound over the past month. The precious metal is trading near $4,381 an ounce, just shy of the closely watched 200-day moving average around $4,484.

A sustained break above this level could reinforce the bullish case for gold, fueled by fading Federal Reserve tightening expectations and continued central-bank buying.

Gold has climbed 6.3% over the past month, outperforming the S&P 500's roughly 2% advance during the same period.

Renee Friedman, global head of research at Exante, attributed the recent rebound to fading expectations of further Fed tightening following weaker U.S. labor market data.

Central banks are also seeking greater reserve diversification, which is likely to continue supporting longer-term demand for gold.

The next drivers for gold prices will be key: labor-market data, inflation readings, Fed expectations, and central-bank purchases.