In the Fed’s latest rate decision, there were some important signals for a potential end of hikes:

• Fed economists predicted a mild recession in general, however, the forecast is for modest growth, not a recession.
• A decision on a pause in rate hikes was not made.
• The economy is likely to face headwinds from credit conditions.
• Policy is having an impact on housing and investment.

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If the Fed is really done soon with rates then Gold can easily break higher if we consider that despite higher US yields since the end of 2021, Gold is trading close to its ATH. So if US yields are going to stay sideways or move down at some point, maybe later this year, or 2024, then gold will rally.

I think there is room for wave 5 to $2200/$2300. Near-term support on dips is at $1970 and $1940.

However, regarding the rates decision going forward, it’s going to be important to track US inflation data. The CPI figures will be released today at 12:30GMT. A move below 5% y/y will likely send the US dollar lower with yields which can be supportive for gold. But even if inflation comes out very high once again with a “negative” surprise for the Fed, I think gold will bottom after an initial spike down, since we know that gold is a hedge against inflation. Also, the bank crisis in 2023 is supportive for gold as depositors move into physical gold.

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