Gold prices are currently trading slightly lower as of this post as profit taking and consolidation drive price action. Gold remains in a bullish posture with more potential upside on the horizon as a combination of issues are working in gold's favor.

The gold market, and investors in general, will get plenty to chew on this week. The latest data on pending home sales is due out later this morning. Tomorrow, markets will get the latest readings on the producer price index and retail sales. In addition, a reading on consumer confidence will be released tomorrow as well. On Wednesday, the consumer price index and ADP employment reports will be released.

Wednesday afternoon's FOMC meeting announcement will likely be the biggest and most important data release of the week. On Thursday, markets will scrutinize data weekly jobless claims and Chicago PMI while Friday will see some key manufacturing data in the form of the PMI manufacturing index as well as the ISM manufacturing index. Investors will also hear commentary from St. Louis Fed President James Bullard and Minneapolis Fed President Narayana Kocherlakota.

The FOMC announcement and any subsequent commentary will likely be the primary driver of price action in gold this week.  It is widely expected that on Wednesday the Fed will leave policy rates unchanged. Investors will be keying in on the Fed's assessment of economic activity. This assessment could drive not only gold prices, but risk assets in general.  Investors will be sifting through the commentary looking for any clues as to the timing and extent of any Fed tapering.

It is now widely expected that the Fed will be on hold with regards to tapering until sometime in the middle to end of the first quarter of next year. This development has come about as weakness in the labor market continues to trouble the Fed and also as the Fed must now see the extent of the damage with regards to the partial government shutdown earlier this month.

Given the fact that QE may continue, and that the dollar remains under some pressure, gold and precious metals have pushed higher recently. Gold prices are thus far comfortably maintaining trade above the key 9,20 and 50 day EMA's.  A test of the $1375 level on the upside still appears to be in the cards in the near future. The $1325ish level appears to be decent support for prices right now, and barring any breaks below this level gold prices remain in a bullish posture.