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Gold is trading at $1270; the precious metal has been in decline since Monday when it touched a three-week high. Traders are no longer in flight to quality mode, and the focus now shifts to tonight's Fed meeting.
A taper of $10 billion has already been priced in, but as the US economy has now recouped all the jobs that were lost during the recession, the Fed could take a more hawkish tone.
Gold is receiving support at the 200-hour moving average of $1264, and a move below this could put the metal on a path towards $1242.
The Fed’s commentary tonight would have to be on the dovish side in order to drive gold back to $1280. Alternatively, as Alastair McCaig stated, an escalation in tensions between Russia and Ukraine could spark a demand for gold.