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The gold market is off on Wednesday morning as concerns over demand take a toll. The weaker-than-expected data out of China this week combined with already-robust concerns over a U.S. recession may be more than the gold bulls can bear. Spot prices are slipping again today, down over $10 per ounce in early action. Outside markets are also working against gold today, as the dollar and treasury yields are both moving higher.

Markets are awaiting this afternoon’s release of the latest FOMC meeting minutes. Investors will closely scrutinize the minutes, looking for any clues about the possible timing and degree of further rate hikes from the Fed. The Fed Funds markets are currently pricing in even odds of a 50 or 75-point rate hike in September.

The Fed and its plans may dominate trading headlines in the months ahead. If the Fed maintains its aggressive policy posture, it has the potential to put the U.S. into recession. If the Fed takes a pause or reverses course, however, it could allow inflation to run real hot while possibly keeping stocks and risk assets intact. Many analysts have suggested the Fed could step away from its inflation fight. Fed Chairman Jerome Powell seemingly suggested after the last meeting that the central bank could begin to pivot away from the inflation battle. Seeing as how the Fed may be unable to get inflation under control, this could arguably make some degree of sense.

Others feel the Fed will stay the course, however, and keep hiking interest rates aggressively. The Fed has said it feels inflation to be the worst threat for the economy and that should it become entrenched, it would be even more problematic. The Fed may already be too far behind the curve to affect inflation, however, and may have no choice but to abandon its aggressive rate hikes to prevent a full-blown recession from hitting.

Should the Fed signal it will ditch the inflation war, gold could benefit handsomely. Without the current threat of even higher rates, the opportunity cost argument for lower gold may be gone. Not only that, but without the Fed taking aggressive action, price pressures could become even worse before getting better. Higher inflation could add to gold’s attractiveness as investors look to preserve wealth and protect purchasing power.

The gold market remains stuck in no man’s land for the time being. The bulls need to produce a close above the $1800 level. The bears are targeting a close below the $1700 level. Whichever side of the market produces a close first may win and prices could trend in that direction for some time.

Despite the recent rally by the bulls, the bears are still in control on the daily chart. They may, therefore, have the advantage when push comes to shove. A close above $1800 by the bulls could negate the bearish price action, however, and send gold quickly back to all-time highs or beyond.