Gold within striking distance of bull territory

Chris Ratcliffe | Bloomberg | Getty Images

Gold pushed above the key $1,400 psychological level on Monday to its highest in almost three months, putting the precious metal within striking distance of bull-market territory.

A combination of weak U.S. economic data on Friday and concerns about geopolitical tensions in the Middle East helped boost gold prices to as high as $1,406 in Asia on Monday, before pulling back slightly to around $1,400.

(Read more: Gold's rebound seems believable this time)

That put gold's gains from the lows hit in late June at about 19 percent, just shy of the 20 percent move that would push bullion into bull-market territory.

"When you look at gold, it only has to travel back through $1,416 to re-enter the bull market. So we're pretty close to that and it [the gains] has been the result of physical demand, geopolitical issues and also in the U.S. and what's happening with tapering," Jonathan Barratt, founder of the commodities newsletter Barratt Bulletin, told CNBC Asia's "Squawk Box."

Gold prices rallied more than 1.5 percent on Friday after news of a sharp drop in U.S. home sales prompted investors to re-think the potential timing for a much-anticipated unwinding in U.S. monetary stimulus.

If bond markets start to indicate a delay in the scaling back of tapering by the U.S. Federal Reserve, that could be another factor driving gold higher, Barratt added.

It wasn't too long ago that the gold market was well in bear territory, falling more than 30 percent between October and June. But analysts say Fed tapering is now largely priced into markets and that the positive sentiment towards gold is growing.

(Read more: Time to start worry about September – yikes!)

One sign of that came in a report from the Commodity Futures Trading Commission on Friday. It showed that hedge funds and money managers boosted bullish bets in gold futures and options to their highest level since early February.

"Further weakness in the U.S. housing market triggered some downplay over the possibility of a QE [quantitative easing] tapering, with gold rising past its $1,400 this morning," analysts at OCBC bank said in a note on Monday. "In fact, the positivity has been observed since last week, with net-long positions gaining."

On Twitter meanwhile, Marc Faber, author of the Gloom, Boom & Doom Report, recommended moving back into gold.

(Read more: Marc Faber: Look out! A 1987-style crash is coming)

Here's his tweet:

— By CNBC.Com's Dhara Ranasinghe; follow her on Twitter @DharaCNBC