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The gold market has been closely linked to the Dollar Index and the crude oil market for some time now. The yellow metal was lower Monday as the dollar moved higher and as crude oil sank. The metal is seeing the opposite effect on Tuesday, however, as the crude oil market is higher and the dollar is sinking. Gold is less than a dollar above the unchanged line, however, and many investors may already be away from the screens as the Thanksgiving Holiday approaches.

U.S. Treasury yields are also seeing a downtick today, which may be limiting any selling pressure in gold. Although the key outside markets may be cooperating today, the gold bulls are likely waiting on the Fed and its plans for 2023 before making any significant moves. Investors are also nervously watching the Covid situation in China. The largest Chinese city of Beijing has reportedly been called a “ghost town.” As China continues to battle the virus, it may be forced to implement more lockdowns or other measures. Some analysts have suggested that 20% of the Chinese economy is already being affected by lockdowns. This is especially important because China is the globe’s second-largest economy and it could have a major dampening effect for the global economy.

Although market action appears to be on the quiet side today, do not rule out some possible fireworks for tomorrow. Wednesday’s session will feature the most economic data for the week, and some key pieces of data could move markets. Perhaps most important, the minutes from the latest FOMC meeting are due for release in the early afternoon Wednesday. These minutes could provide clues for investors about the Fed’s intentions as the new year gets underway in a few short weeks. It is currently expected that the Fed will hike rates again in December, although they may not hike by another 75 basis points. A 50 or even 25 point hike may be more likely this time around. Investors will pay close attention to the central bank’s commentary following the decision on rates, however, to gauge the Fed’s plans for 2023.

If the Fed maintains a hard line and sounds overly hawkish, investors are likely to fret further about the possibility of a recession next year. If the Fed sounds more dovish, however, it could ignite a fire under the stock and gold markets, potentially sending both quite a bit higher in a short period of time. The Fed may hold the keys to gold’s fortunes next year, and a great deal may depend on how the Fed approaches policy in the months ahead.

Recent inflation data has pointed to a possible slowing of inflation. It remains unclear, however, whether that slowdown will become a trend or if it is just a one-off. Any further data possibly demonstrating that inflation is slowing would be cheered on by investors and could keep the Fed from continuing in their aggressive hiking.