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The gold market is higher by a few dollars per ounce in the early afternoon of Tuesday. The metal had been lower earlier in the day by several dollars, only to bounce back on the word of Russian Missiles being fired into Ukraine, with two of them reportedly traveling into Poland and killing two people. The major data point of the day was the latest reading of the Producer Price Index. The PPI, like CPI, came in under estimates. The 8% reading was below estimates for a reading of 8.3% and may add further credibility to the notion that inflation may now be easing.

The previous CPI data had been a major relief for markets. Today’s PPI data will add to that sense of relief. Markets seem to be getting the impression that the worst of the inflation debacle may now be behind us. This is certain to fuel questions about what the Fed may do next month and as 2023 gets started. The Fed will almost certainly still raise rates in December, although at this point a 50-point hike may be far more likely than another 75-point hike. What the Fed does as 2023 gets underway, however, is another matter entirely and could have a major impact on U.S. and global markets.

As markets await the Fed and what it may or may not do, they will also be forced to pay attention to other inputs as well. The ongoing war in Ukraine, for example, may become an increasingly important influence on gold and markets. The news that two Russian missiles missed their target today and killed two in Poland could lead to a rise in Russian and Western tensions. While it remains very unlikely the west would get involved in the conflict, the killing of innocent bystanders seen today may draw not lonely criticism but action. With Russian leader Vladimir Putin already discussed the use of nuclear weapons, any escalation in the war could lead to significant risk aversion across markets. This could, in turn, possibly lead to more buying interest in gold for its perceived safety. Because Poland is a member of NATO, action could be seen by NATO members to defend their counterparts.

The globe will also watch any fresh developments in the crypto space after the recent FTX liquidity crisis. Cryptos have since stabilized, but it seems that much damage has been done to their reputation as a possible safe haven. Bitcoin remains well below the key $20,000 level, and gold may now not see nearly as much competition from crypto if times get tough.

The gold bulls will attempt to take the market over the $1800 in the sessions ahead. The bears will target a close below the breakout point of $1700. If the bulls can produce a close above $1800, the market could be primed for a sustainable run higher that could even see it back near all-time highs before long. If the bears get the market lower for a close below $1700, a fresh wave of selling could be seen, possibly taking the market as low as $1500 before finding willing buyers.