NEW YORK (TheStreet) -- The Federal Reserve began its two-day Federal Open Market Committee meeting on Tuesday. Mahir Dange, an options trader at Grafite Capital, told TheStreet's Joe Deaux it's hard to tell what the Fed will do in terms of tapering its bond purchases.
So many investors had expected the central bank to begin doing so in September, which didn't happen, Dange said. Recent economic data and government shutdown forced the Fed to postpone any tapering. The question now remains, when will it begin?
Dange said based on what he sees in the options market, there will not be any changes to the asset purchasing plan following the current meeting. If this proves true, the yellow metal should rally but will likely be met with resistance in the $1,400 to $1,425 level. Gold has remained rangebound for the past several months, he said.
As to when he thinks tapering will begin, the first quarter of 2014 seems to be most likely. If that's correct, he said gold could break out of its current range and form a new one, with support near $1,350 and resistance at $1,550, the level at which gold initially broke down from earlier this year.
-- Written by Bret Kenwell in Petoskey, Mich.Follow @BretKenwell