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Even a best-case Fed scenario might not save gold

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What the Fed’s decision means for gold

Gold traders are hoping to hear a dovish statement from the Fed on Thursday afternoon. But even a Fed best-case scenario won't be able to save gold from its continued slide, some traders argue.

Gold did manage to rise 1.5 percent on Wednesday, one day ahead of the Fed announcement, which will reveal whether or not September will mark the start of a long-awaited tightening cycle. But the precious metal is still down nearly 6 percent in 2015.

"I see gold as essentially in a dead cat bounce right now. It's still in a long-term cyclical decline," Boris Schlossberg of BK Asset Management said Wednesday on CNBC's "Trading Nation." "If it gets any kind of help from a delay in the Fed rate hike, it's going to be just temporary."

Read More Gold languishes near one-month lows ahead of Fed meet

A Fed decision to raise its federal funds rate target should theoretically be bad for gold. After all, gold does not pay a yield (on the contrary, it costs money to store) so the asset becomes less attractive in comparison to bonds when short-term rates rise.

Additionally, higher rates increase demand for the U.S. dollar, and it should take fewer of those now-more-valuable dollars to buy the same amount of gold. Another way of saying this is that gold prices will fall. Indeed, gold's decline over the past several years has been paired with a rally in the greenback.

If a rate hike would be bad for the yellow metal, then a Fed decision to stay put should be bullish for gold. But such a decision can also be expected to boost other assets that are far more attractive, argues Rich Ross of Evercore ISI.

Read More Jeremy Siegel: How a Fed hike could boost stocks

"There are far better places for your money over the intermediate to long term, based on a dovish commentary," Ross said Wednesday. "If you're going to buy something on a positive expectation out of the Fed, buy something else. Buy some stocks, buy some copper, buy something with some economic sensitivity."

Ross predicted that any bounce gold sees will be strictly a short-term one. He expects the metal to continue to fall and eventually break below $1,000, which is about 10 percent below current levels.

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