"He had to pawn their gold. That's what they've done. They can buy it back. They have rights of first refusal," said Dennis Gartman, publisher of The Gartman Letter. "They went to the biggest pawnbroker of gold—Citibank."

The swap, reported last week, provides cash to President Nicolas Maduro's socialist government as the country reels from a steep drop in oil revenue. Reuters reported Friday that the Venezuelan central bank was expected to have provided 1.4 million ounces of gold in exchange for the cash, and the country would have to pay interest on the funds.

Gold surged above $1,200 an ounce Monday in its best day since January, amid market intrigue surrounding a deal between Venezuela and Citigroup to swap $1 billion in cash for part of the country's gold reserves.

The deal was cited as one of several things that helped drive gold futures to the highest level in two weeks. Futures for June jumped 2.4 percent to 1,203.20 an ounce. Gold stocks also rallied, with Freeport-McMoran up 5 percent and Newmont Mining up almost 3 percent.

"That was a huge potential seller taken out of the market. It's not an overhang anymore," Gartman said of the Venezuela deal. GLD, the Spdr Gold Trust ETF, was up 2 percent, its best day since late January.

Kevin Grady, president of Phoenix Futures and Options, said while there was talk about the big gold swap, he said the bigger factor driving prices was the expiration of May options Monday and short covering.

"If we didn't have the options positions rolling off again, I don't think we would have had the market going to $1,200," Grady said. On Tuesday, the April futures contract expires. There also was an increase of 13,000 shorts in the market, a positive since those traders could be forced to buy gold when they cover, he said.

"I'm bearish until gold settles at $1,230 ... every time you get up there, there's a major wall of selling that comes into the market. Even this rally today—as impressive as it is—$30 on the day. We're stuck in this range," Grady said. He said gold rallied to the middle of the range, which is between $1,177 and $1,220.

Even so, George Gero of RBC said he believes the Venezuela deal juiced the market. "I think that has a lot to do with raising awareness of institutions. Where they are in the second quarter, in the second week—how they haven't allocated to gold. ... This was like a wake-up call," he said.

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Gero said the market may now be able to hold $1,200. Gartman agrees. "It's important, yes it will hold," he said.

For Gartman, the decision by the Peoples Bank of China to buy regional and national securities was a big factor for the market. "The Peoples Bank of China has gone full in for QE," he said. "Finally, you've got the PBOC, which is a monstrous bank making an implied bet on inflation."

Strategists also said the market was positioning ahead of Wednesday's Federal Reserve statement.

"I think there's some short covering prior to the Fed meeting," said Gero, adding traders think the U.S. central bank will promote a dovish mood.

Howard Wen, precious metals analyst at HSBC, also said the market was moving on speculation about what the Fed would say after its meeting Wednesday..

"We have the FOMC meeting ahead and from a historical perspective, prices tend to be more volatile ahead of FOMC meetings," said Wen. He said the market also will be watching the coming data including Tuesday's consumer confidence and Wednesday's first-quarter GDP, both potentially dollar-moving data points.

"It seems like the $1,200 level hasn't been that significant lately. It's kind of been trading in a range so far in April, in and out of $1,200. That might be the middle point between the upper and lower bound," he said.

If the Fed sounds in any way hawkish, gold could decline and the dollar would rise, he said.