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The precious metal is trading down at $1265 after shooting to a two-month high overnight when concerns about Argentina’s financial health prompted dealers to fly to quality. The collapse of the Argentine peso on Friday was the biggest drop in over a decade. It sent fear of a default racing through the financial markets, which in turn boosted gold.
Although gold is back in the red today, if fears persist over Argentina we could see it surge again. Last week it closed above $1268, and as Alastair McCaig stated it could retest the $1300 level.
On Wednesday the Federal Reserve will release its latest statement. At its last meeting, in December, the central bank decided to reduce the stimulus package by $10 billion per month, and there is talk of another $10 billion being trimmed now. If tapering goes ahead, gold could head towards the support level of $1240.