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The gold market is higher in mid-day trade Tuesday as investors position themselves ahead of tomorrow’s FOMC meeting announcement on rates. Bulls stepped into the market earlier in the session to buy the dip seen Tuesday morning, and the market is now higher by nearly $7 per ounce as the pit session prepares to close. Trading has been somewhat muted across markets this week as investors prepare for tomorrow’s FOMC announcement and press conference. Expectations are for the Fed to raise rates by 25 basis points rather than the previous 50 or 75 points.

The Fed announcement on rates could be market-moving tomorrow. The 25-point hike is likely to do little to move markets, but the Fed’s commentary afterward could be very telling about its plans moving forward. If the Fed is seen as being more dovish, it could potentially send gold and stocks higher as hopes for a reversal on rates may increase. If the Fed is viewed as being more hawkish, however, the markets could be sold off heavily. Fed Chairman Jerome Powell is likely going to be very careful in what he says and how he says it tomorrow, and the markets could potentially come away with nothing new to go on.

The Fed’s plans are certainly a major factor for gold in the months ahead, but they are not the only factor. The war in Ukraine, the potential for a Chinese invasion of Taiwan, the dollar, and other factors may all play a role in how gold performs in the months ahead. Even with a more hawkish-sounding Fed, the gold market may see a quick rebound from any selling as investors look to buy the dips. The upcoming U.S. Presidential election may also play a role for gold as the election gets closer.

For the time being, the bulls will have to buy based on what they already know. The bulls have thus far done a good job of holding the market above the $1900 level. The next major bullish target is well within striking distance at this point, with the $1950 area only about $20 away. If the bulls can produce a close above $1950, the market could be poised to attempt previous all-time highs. If the Fed were to signal a course reversal on rates later this year, the gold bulls could not only rapidly reach previous all-time highs but could start making new all-time highs in the process. A dovish signal from the Fed could not only suggest a move towards previous all-time highs but could make $2500 or $3000 per ounce gold a reality in the months ahead.

The bears have their work cut out for them. They must first produce a close below $1900, followed by a close below $1800. The real test for the bears would likely not come unless the market were to test the upside breakout point around $1700. A close below that could send the market sharply lower, with little in the way of support until the $1500 level is reached.