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The gold market is on sale now, as prices nearly hit a 2.5-year low Thursday. The yellow metal is being hit by a number of bearish factors, including recession worries, demand concerns and a hawkish Fed. With spot prices now well below the $1,700 level, there may be little in the bears’ way of taking the market sharply lower. The metal could see $1,550 before finding some solid footing and any rallies in the meantime could prove to be short-lived.

Precious metals investors are concerned about the health of the economy. With the Federal Reserve likely hiking rates by another 75 points next week, possibly even 100 points, worries over a major economic slowdown may weigh on gold for some time. A slower economy could equate to less demand for metals from both investors as well as commercial users and could keep prices depressed for an extended period of time.

The U.S. Fed is not the only source of concern. Other global central banks are also looking to tighten policy, and the global environment of rising rates may weigh on the global economy. Not only that, but recent data out of China has not been great. A decline in several key areas of the globe’s second-largest economy could spell trouble for the rest of the world. Unlike other central banks, China has been easing policy to boost its economy. China is likely to continue to ease despite being the only major economy to do so.

Stocks are under pressure Thursday as treasury yields rise. Higher yields may also keep gold under pressure in the months ahead and could also bolster the dollar. Higher yields and a stronger dollar have been a major roadblock to higher gold in the last several months and may continue to act as such in the months ahead. A hawkish Fed statement next week along with an aggressive rate hike could keep the dollar climbing and may also keep upward pressure on yields. The trends in yield and the dollar are unlikely to change anytime soon and may remain in place until the Fed takes a more dovish tone.

The months ahead may become increasingly challenging for markets across the board. If the U.S./ does enter recession, the stock market and risk assets could take a significant tumble. As the economy slows, demand for commodities such as silver and gold could also take a hit. Trouble in the Chinese economy may only reinforce a drop in demand and could keep commodity markets under pressure.

The decline below the $1700 level may keep the bears on the move. There is little to stop the market now until the $1550 level is reached, and that area could be seen sooner rather than later. Volatility in the gold market could potentially rise now that the market is on the move again, and any rallies may be sold into until proven otherwise.