Why the budget deal is bad news for gold: Pro
Most analysts expect the Fed to start tapering its $85 billion monthly bond-buying program in the first quarter, with only 2 percent expecting a move at next week's meeting.
I'm not a contrarian by nature, but I do like the risk-reward of betting that it does taper next week, especially with a budget deal being struck. A large part of why the Fed chose not to taper in September was the high probability of a government shutdown and debt ceiling debate, but a repeat of that next year no longer looks likely.
Between that and the strong economic numbers we've been seeing, a December taper is certainly not out of the question.
(Read more: As funds get massively short, gold could spike)
This is bad news for gold. The metal always reacts sharply to Fed news, as it can be expected to suffer from the rise in interest rates and reduction in inflation expectations that will most likely accompany a reduction in QE.
Gold is retreating on Wednesday, though it has found support at the important $1,251 to $1,253 band. It looks like we now have a short-term range defined for this week between $1,242 and $1,270.
Outside of this range, major support comes in again at $1,234 to $1,235, and resistance at $1,289 to $1,293, an area marked by the 50-day moving average and a retracement level.
(Read more: Gold can go much lower: RBC's top technician)
With little crucial data scheduled, you should expect to see gold hold in either the smaller $1,242 to $1,270 range or the larger $1,234 to $1,293 range. But all eyes will be on next week's FOMC statement, which could have a major impact on the yellow metal.
Again, the wild card is that it does taper in December. So don't get caught on the wrong side of your trades—plan ahead!