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The Level Gold Bulls Need to See: Pro

All eyes are on the Federal Reserve.

Gold's choppy overnight trade kept the metal above $1,380, and it rallied to $1,388 shortly after midnight. Traders will be tuning into Fed Chairman Ben Bernanke's testimony in Congress on Wednesday morning for any clues about the bank's bond purchasing program.

Additionally, the Federal Open Market Committee Meeting minutes will be released in the afternoon, and traders again will be looking closely. The big question is when the Fed will stop or taper quantitative easing.

(Read More: Hilsenrath: Here's What Bernanke Will Say)

(Also: Don't Expect Bernanke to Talk Taper...Yet, Pro Says)

With Consumer Confidence at the highest levels in years, and the equity market continuing to rise, gold has taken a back seat as investors flock to more attractive investments. The metal was able to trade well off the lows it put in on Sunday night, but gold has been capped at $1,400. Only a close above $1,404 will be able to signal a potential bottom in this market.

Robert George Young | Photographer's Choice | Getty Images

On Tuesday, gold reached a low of $1,358 after running stops below the major $1,364 to $1,367 support level. A retest of that low on Wednesday will be very discouraging for the bull camp. In fact, for the bulls, it will be very important to see continuous trade activity above $1,375, with a close above $1,383.90. Look for resistance to remain at $1,396.20 to $1,397 in the session.

Rich Ilczyszyn is Founder and CEO of iiTrader. Follow him on Twitter: @RIlczyszyn

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