Standard and Poor's Ratings Services cut Italy's credit rating by one notch yesterday on weak growth prospects and mounting government debt. But this news failed to attract investors towards gold due to Fed meet which is scheduled Sept 20-21.

In the US, Federal Reserve Policy-makers will assemble in Washington to discuss about the possible steps to spur the economy. This is one of the major events of the month, which will be very important for the direction of the gold. Investors globally have hold their nerves to hear the outcome of the meeting.

Investors are expecting Fed to come out with another round of Quantitative Easing to stimulate the economy. If Fed comes out with significant easing in its monetary policy, then gold might turn bearish over the medium term but if Fed fails to take any possible step in this two-day meet, gold may rally again over its safety of haven attribute.

The price of gold futures have corrected since yesterday as traders have squared-off their positions to book profits before any result comes.

At the Multi Commodity Exchange, gold for delivery in October opened low at Rs 27,725 per 10 grams, and was trading in the range of Rs 27,674 – Rs 27,677 per 10 grams around 11:54 am IST.

Similarly, the metal for April contract delivery opened at Rs 28,545 per 10 grams, and was trading in the range of Rs 28,534 – Rs 28,568 per 10 grams.

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