The gold market is on the offensive today as crude oil prices continue their recent ascent. Crude prices are up by nearly $5 per barrel in late morning trade as the notion of a boycott of Russian oil takes hold. Stocks are solidly lower on the day thus far as risk aversion remains robust. Although the war in Ukraine has continued, nothing much of substance has come to light lately. President Biden will be meeting with NATO leaders and allies tomorrow to discuss the invasion and possibly even additional actions against Russia.

The Russian/Ukrainian war is certainly a source of market anxiety. In addition to the war, however, investors are also left fearing rampant inflation that has seen prices skyrocket in recent months. Not only might the Fed be forced to battle inflation through monetary ;policy decisions, but those decisions could have negative effects of their own. The 2-year and 10-year yield curve is close to inverting already. An inverted yield curve could point to a looming recession. Without question, if the Fed acts more aggressively towards policy than previously thought, the economy will feel the not-so-subtle effects. This slowdown could in turn lead to sharply lower equity markets and selling across risk assets that could change market dynamics for years to come.

The Fed recently raised the Fed Funds rate by 25-basis points in a move that was widely expected. Without the war in Ukraine, the central bank may have been more aggressive and could have raised rates by 50-basis points. Fed Chairman Jerome Powell this week left the door open to larger rate hikes or more of them. His commentary would seem to suggest that a 50-point hike could be seen in the next month or two and that markets should not be taken by surprise by such a move.

Since reaching new all-time highs earlier this month, the gold market has been on the defensive as prices sank by well over $100 per ounce in just a couple weeks time. Price action around current levels may be viewed as noise, however, as the bulls and bears are fairly far from any targets of consequence. The bulls would like to produce a close above resistance at the $2000 level. The bears would like to see a close below the $1900 level and then $1850. Prices in between these areas may not mean much. Time will tell which way the market goes. Prices could very well spend several weeks or longer in this range, however, as investors await further inputs on both the war as well as monetary policy before placing any big bets. The formation of a bearish pennant pattern on the daily chart will not help the bulls, and could even lead to rising selling pressure that could see the bears test the $1900 level before abating. Market volatility is likely to remain high as the war rages on and before more is known about the Fed’s outlook and plans.

The gold market is higher in early afternoon trade as the earlier dip was scooped up by bargain-hunting bulls. Spot prices are up over $10 per ounce following the conclusion of the day session as a combination of bargain hunting and short covering takes effect. The gold and other markets continue to monitor the ongoing Russian/Ukrainian war. The war has apparently taken a turn for the worse as Russia reportedly used a hyper-sonic missile over the weekend in an attack on a Ukrainian city. The conflict could potentially see increasing casualties at this point as markets still consider the possibility of nuclear weapons being utilized.

U.S. President Biden is set to meet this Thursday with NATO and EU leaders to discuss the Russian invasion of Ukraine. The Biden administration has said it will reaffirm its commitment to NATO and its allies.

Outside markets are in a bullish posture for gold today. Crude oil prices are higher, hitting over $110 per barrel. The dollar is weaker on the day while yields are pushing slightly higher. The continuing rise in treasury yields is likely due to increasing inflation worries. The yield of the benchmark 10-Year Note may rise further as the Fed lags behind the inflation curve. Following the first 25-basis point rate hike last week, markets are now wondering how aggressive the Fed may get in order to battle price pressures. Many now believe the Fed will be forced to raise rates seven times total this year. The Fed also left the door open to larger rate hikes, which could mean at some point the central bank elects to hike rates by 50 rather than 25-basis points. The shock and awe from such a move may eventually fuel a decline in inflation but comes at a price. Stocks and risk assets may continue to trend lower during the tightening cycle and a large-scale sell-off could be seen.

Fed Chairman Jerome Powell said today that the Fed could also decide to raise rates at a faster pace if inflation does not begin to abate. The expectations for this year, which were previously for inflation to peak in the first quarter and then level off, have already fallen apart. The hopes for a large decline in prices in the second half of the year has completely fallen apart, and as such the Fed could become a lot more aggressive with policy than previously thought.

The next several weeks could see the bulls attempting to fight off a correction. The market has already begun correcting since reaching new all-time highs earlier this month and the bears may battle to see further momentum in the weeks ahead. The weekly chart may be indicative of a top being reached. The bulls will look to take prices back above the $2000 on a closing basis. The bears will look for a close first below the $1900 level and then the $1850 area. A close below these levels could boost the bearish narrative and provide further downside momentum.

The conclusion of the latest FOMC policy meeting has now come and gone. As expected, the central bank raised its Fed Funds rate by 25-basis points in what may be viewed as the opening salvo for rate hikes this year. The Fed alluded to possibly hiking rates as many as seven times this year in order to combat rising inflation. The Fed’s statement also cited the ongoing war in Ukraine as a source of higher inflation and traders are now awaiting the press conference to begin with Fed Chairman Jerome Powell.

Stocks are moderately higher following the Fed statement, although they could come under pressure during the press conference today. Today’s reaction to the Fed’s rate hike has been a non-event for the most part. Markets have shown little reaction to the rate hike amid ongoing worries over the Russian/Ukraine war and accelerating inflation. Investor risk appetite is also getting a boost today from reports suggesting that both Ukraine and Russia feel progress is being made in their talks about stopping the war. Of course, time will tell if anything actually comes to fruition. In the meantime, however, the shelling continues.

Chinese officials overnight said they desire further market transparency and want to keep markets running smoothly. These comments fueled a rally in Asian equity markets as China has recently implemented lockdowns related to the spread of Covid-19. The lockdowns have affected global markets, as they may temper demand expectations for certain areas within the globe’s second-largest economy. Chinese lockdowns could, in fact, be playing a role in weaker crude oil and commodity prices.

All things being equal, today’s Fed announcement has not had much effect on markets at all. The central bank did hint at an aggressive turn in its policy stance, however, when it suggested it may need to hike rates seven times this year. With the Fed’s shift in policy expectations came new forecasts for inflation  and GDP. Despite an increasingly aggressive Fed, inflation is likely to remain at 4.1% throughout the year. GDP growth has been trimmed from a 4% forecast to just 2.8%. A Fed statement also suggested the Fed would begin trimming its $9 trillion balance sheet “at a coming meeting.” This issue may be addressed further by Powell during the press conference this afternoon.

For the gold bulls, the upside initial target remains the same. The bulls would like to see a close above the $200 level before getting overly excited. The bears are looking for a further decline and a close below the $1900 level as a starting point. A close below this level could attract further sellers while forcing longs to exit the market, possibly exacerbating the selling in the process. The market may not fall too far, however, despite a more aggressive Fed policy stance. The ongoing war and battle against inflation may both keep the yellow metal afloat and could be a primary catalyst for a rally to new all-time highs in the weeks and months ahead.

After getting hammered late last week, the gold market is sharply lower again today to begin the new trading week. Spot gold prices are down significantly, declining by over $33 per ounce to $1957 and change. The metals are being sold off today as crude oil dipped below $100 per barrel and as risk appetite is seeing a slight improvement. Weaker crude oil is acting as a drag on all commodities, and if prices sustain a weaker tone it could be bearish for gold. The yellow metal is also weaker on renewed hopes for a de-escalation in the Russian/Ukraine war. The two nations continue to meet and hold talks, although nothing major has happened as of yet despite some notions of progress being made. In the meantime, the war moves on in Ukraine.

The most important data point of the week will be the FOMC meeting taking place Tuesday and concluding Wednesday. The Fed is widely expected to raise the Fed Funds rate by 25-basis points. While a rate hike may now be a foregone conclusion, the markets are likely far more interested in any commentary the Fed provides concerning its plans going forward. The Fed has already penciled in three rate hikes for this year. Many analysts now believe the central bank will need to raise rates four, five or even more times to have any effect on rampant inflation. Any clues provided by the Fed could move markets in the meantime, and if the Fed appears to be growing increasingly hawkish it could have a bearish effect for stocks and risk assets.

Stocks have already been under much more pressure in recent weeks. Equity markets have seemingly moved from a mentality of “buy the dips” to “sell the rallies.” This change may keep equity markets trending lower. Weaker stocks could have a bullish effect on gold, which could stand to benefit from increasing inflows. Stock market weakness could drive capital into the yellow metal and other metals markets, possibly driving prices higher in the process.

Key outside markets could be pointing to a top in market anxiety over the war. Crude oil is now sitting at around $102 per barrel after hitting 14-year highs over $130 just last week. Yields on treasuries have also been on the rise, with the benchmark 10-Year Note now fetching a yield of 2.115%.

The price of gold is in a six-week old uptrend on the daily chart. The bulls are still in control of the market despite the selling seen in recent days. The recent market weakness may be indicative of a top being in place, at least temporarily, and further weakness could validate that as being the case. The bulls upside target is to produce a close above recent all-time highs at $2078.80. A close above this level could set the stage for a sharp and rapid run higher with no upside chart resistance to stand in the way. The bears will look to target a decline below support at the $1900 level.

After hitting fresh all-time highs for a brief period yesterday, the gold bulls appear to be booking some profits today following the recent sharp run higher. Key outside markets are also pointing to potential trouble for the gold market today. Stocks and cryptocurrencies are sharply higher while crude oil is lower. On a positive note, however, the dollar is also seeing some selling pressure today and is off the 100 level, trading down to the 98.38 area. Thus far, the large decline seen in gold today may be nothing more than short-term profit-taking. Another significant down day tomorrow, however, could point to something a bit more sinister.

A slight shift is being seen today in the outlook over Ukraine. Tensions appear to have eased, just slightly, as Ukrainian President Zelensky has said he may be shifting his thinking regarding the country’s bid to join NATO. While a change in his thinking may be easing tensions today, many analysts doubt it would be enough to halt the war. If the war continues, the price of gold is likely to remain elevated and on the offensive.

Down nearly $70 per ounce around lunchtime Wednesday, such a significant down day for gold may be a bit unexpected, at least until one examines the chart from Tuesday. Yesterday saw a major up day with a very wide range, and the market could simply be looking to back and fill some of the chart before being in a position to move higher again. Disappointing for the bulls, however, is the fact that the market has not held the $200 level thus far. Currently sitting around $1985, the gold bulls are well within striking distance of $2000 and that area may be challenged in the days ahead.

Market watchers will be paying close attention to gold today. A good key to the market’s underlying strength may be whether bargain hunters step in to buy the sharp dip today. A lack of buying into the close, however, could point to more selling tomorrow. After covering significant ground in a short period of time to the upside, the market could become increasingly vulnerable to an even larger pullback. Despite any pullbacks the gold market may see, the price of gold is unlikely to fall too far. Inflation, economic risks and other issues may all keep gold well supported in the months ahead.

The Federal Reserve could also play a role in higher gold. The central bank will almost certainly hike interest rates by 25-basis points this month and may point to several additional hikes down the road. The Fed’s plans could possibly change if conditions in Eastern Europe deteriorate further, although it seems unlikely at this point that the war will affect the Fed’s decision making process. Needing to get inflation under control, the Fed is likely to take a more aggressive approach to policy this year than previously anticipated. That could equate to more than the three rate hikes the Fed has penciled in already, and could mean that four, five or even more hikes are implemented to get prices under control.