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The gold market is being hit hard today as rising bond yields and a stringer dollar take their toll on the metal. Down nearly $20 per ounce, the gold market has now hit a three-week low. The yellow metal does not seem to have much going for it this week as risk appetite is a bit stronger and as earnings are coming out stronger than expected.

The dollar is bouncing from a two-week low today as treasury yields climb. Yields now stand at a 14-year high and could see even more upside if the Fed continues with its current plans to keep hiking rates aggressively. The Fed will be meeting again in early November, and as of right now the markets seem to be expecting another 75-basis point hike from the central bank. The Fed may then follow up its November hike with another hike of 50 to 75-points in December to finish off the year.

If the Fed does continue to hike rates aggressively, worries over a recession could expand further. The recession concerns have already fueled some market volatility in recent months and could send volatility soaring if a recession appears to be imminent. The Fed will obviously attempt to tread carefully as it looks to get inflation under control. Despite the Fed saying it believes it can quell inflation without causing a recession, markets do not like higher rates. If rates continue to climb, they may reach a breaking level at some point that could send the economy for a sharp slowdown.

Until that day comes, the markets may keep seeing some up and down price action. Despite worries over a recession, the economy still has a number of good things going for it that may keep investors out of gold and looking to get into stocks on any significant dips in value. The gold market may not see any sustainable upside until such time as a recession becomes “official” or the Fed decides to take a pause or reverse course.

Investors spent several months believing the Fed would eventually elect to take a pause and possibly even start easing rates again. This has not happened thus far, however, and the Fed has maintained its hawkish rhetoric for the time being. It is this rhetoric that may be boosting yields and the dollar and hence acting as a major obstacle to a gold recovery. The biggest question now is how long can the Fed maintain its hawkish stance? At what point might the Fed start to suggest that it could take a break or even start lowering rates again?

The day of reckoning for the Fed may arrive sooner rather than later. Once it does, the Fed will have to make decisions that could influence markets not only now but for many years to come. Their decisions will have the potential to send gold skyrocketing higher, and if so, you will want to own some of the metal before it does move sharply higher. That makes now the ideal time to not only buy gold at fire-sale prices but to enjoy the comfort that comes along with gold ownership whether it rises or declines in value.