Bernanke Isn’t Going to Save This “Sinister” Gold Chart, Says Trader

This has been one of the most unlucky years for gold in the past decade. The yellow metal has fallen 18% in 2013 but, with the Federal Reserve Bank kicking off a crucial two-day meeting today, could bullion finally buck its recent dismal trend?

The market is waiting to see what the Fed's next move will be. The Fed currently pumps $85 billion into the economy every month though purchases of bonds. This second round of "quantitative easing" ("QE2") has helped bring interest rates to its lowest levels in decades.

If QE2 is tapered earlier than expected, anticipated future inflation will go down because there will be less dollars in the economy ahead. As gold is considered to be a hedge against inflation, gold prices would presumably go down with an early tapering of QE2. That's why many gold investors paying attention to this Fed meeting.

More than half of gold's losses this year came over the last two months. Since then, it has traded sideways, according to Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson. "It's really no joy for either the bulls or the bears," says Ross.

Gold prices made what Ross referred to as a "sinister triple top" at around $1,420 per ounce before falling again. "Unless gold can break out from through $1,395," says Ross, "she's not going anywhere fast."

On the fundamental side, CNBC contributor Steve Cortes, Founder of Veracruz TJM, thinks the Fed will do nothing. "Though they're debating taper, nothing is imminent," says Cortes. "My guess is that Bernanke is going to continue as is, with full-blown QE for a longer time than most folks in the market think."

Yet that's not what's now caused Cortes to change his opinion on gold. "I'm fan for the first time in a very long time. And, the main reason for me is sentiment," he says. A contrarian, Cortes now finds gold interesting because the precious metal is no longer as popular as it once was.

"I think the violent selling of April and May indicates that the weak longs are now out of the gold market," says Cortes. "I think it's time to look to get in."

What's next for gold as this meeting gets underway? Watch the video above to hear Ross and Cortes debate gold's fate and the Fed meeting.

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