Critical day for gold

Günay Mutlu | E+ | Getty Images

Gold could see a $50 swing either way after Wednesday's Federal Reserve announcement.

Gold has remained range bound as we head into Wednesday's heavy lineup of data. The high reached on Tuesday night was $1,339.70, as the metal found resistance against our $1,340.90 level.

On Tuesday, the metal reached a low of $1,317 before recovering to close at $1,324.80, which is right at the pivotal $1,325 level. The better-than-expected ADP and GDP data is definitely putting pressure on gold, and has sent the market toward Tuesday's lows.

(Read more: Gold drops after stronger-than-expected GDP)

Good data pose a problem for gold, because it could indicate that the Fed will taper quantitative easing relatively soon. But the Federal Open Market Committee announcement Wednesday afternoon should shed a bit of light, and that's why it will be crucial for gold.

At this point, a close above $1,340.90 is needed to provide positive momentum, and a close above $1349.20 to $1,352 is needed to signal an upside break out of the current range.

Rich Ilczyszyn is founder and CEO of iiTrader. Follow him on Twitter @iiTrader.

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