Gold prices continued to consolidate above the 1307 handle for the past week.

The sideways range suggests that heading into next week’s FOMC meeting, the risk is equally balanced in gold prices with the potential to price to move in either direction.

With the support level at 1307 holding strong, price action could be seen retesting this level once more but the bias to the upside is building up.

Still, as long as price remains within the range established of 1328 – 1307, only a strong breakout from this level will confirm the next leg in the trend.

The Fed’s meeting is due on Wednesday, March 21 meaning that price action will remain flat until then.

With the markets already discounting the 25 basis point rate hike, the outcome in the markets will depend on how the Fed’s future path of rate hikes will be interpreted.

For one, the weaker pace of GDP growth and inflation is expected to see the Fed remain on track for three rate hikes.

If this is the case, then there is a strong potential for the markets to rally as the 25 basis point rate hike is unlikely to support a stronger U.S. dollar.

For gold prices, from a technical stand point, watch for the support at 1307 which will be critical.

A breakdown below this level could see prices declining to the lower support at 1282 – 1274 level where prices are pending a retest of support.

To the upside, a breakout could quickly escalate into a strong rally above 1328. This could see gold prices aiming for the 1357 level of resistance.