The dollar has also been selling off sharply in recent trading sessions, suggesting a possibility that tapering will be delayed or perhaps a "token" amount will be announced tonight. This theory is backed up by rising equity prices, however gold is unable to gain support even in this environment, which is very worrying for the bulls.
The levels to watch remain 1270 as support and 1350 as resistance - traders will be looking to enter positions around these key areas following the FOMC statement, which we expect to provide a lot of volatility later today.
In an environment of rising interest rates, low inflation, a recovering economy and strong equities, gold has few friends at the moment and further downside seems more likely than a sustained rally, despite this being the strongest period of the year for gold prices historically.
We expect a retest of 1180 before we see 1400 again, with a real possibility of a drop towards 1000.
Today's video for subscribers looks at the recent trading in more detail and our strategy for our next trade.