A rally in gold prices puts it on the verge of breaching a bullish line in the sand for the first time in nearly 7 months

Gold futures Tuesday afternoon were enjoying some genuinely bullish momentum for the first time in months, with a surge in the yellow metal taking prices near a 5-week high and potentially toward its first close above its 50-day moving average since late April. December gold was up $16.30, or 1.4%, at $1,208.10 an ounce. A settlement around this level would be the highest since Aug. 29. Moreover, a close above $1,207.44 an ounce would represent the first time a most-active contract has closed above a short-term trend line since April 20, according to FactSet data. Technical analysts watch moving averages to help gauge bullish and bearish momentum in an asset. Tuesday's climb for gold comes as traders focus on political jitters in Italy over fundamental factors that should otherwise capsize gains for the yellow metal. Investors have sought havens amid fears centered on a controversial budget plan rolled out by the antiestablishment Italian government. Last week, Italian officials proposed a budget deficit target of 2.4% of its gross domestic product, which was wider than expected and has put the country's leadership on a collision course with the European Union and threatens to roil markets. Still, buying appetite for assets perceived as risky continued apace, with the Dow Jones Industrial Average and the S&P 500 index trading near records and the U.S. dollar also strengthening against rivals. The ICE U.S. Dollar Index was up 0.2%. Gold ordinarily falls when stocks rise and a stronger greenback tends to be a headwind to the precious commodity because a beefier buck can make assets priced in the currency more expensive to buyers using other monetary units. However, those bearish factors may be offset by demand for a beleaguered commodity that has been in the doldrums for the past seven months.

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