Investors worried that taxing bank deposits in Cyprus could lead to worrying implications, particularly in the preipheral euro zone region. This could lead to a run on bank deposits, aggravating the economic conditions in the country and region.

Gold investors are also eyeing the Federal Reserve meet outcome, which will further decide the movement of gold depending on the decision of the Fed on asset purchase programme.

Any positive outcome of the Federal Reserve meet will boost the yellow metal sentiment. International spot gold was seen trading at $1,605 an ounce.

Domestically, gold futures for April contract on the Multi Commodity Exchange was trading higher by Rs 57 at Rs 29,604 per 10 grams at 12.20 pm IST.

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