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The gold market is higher on Wednesday as spot prices have climbed a solid $12 per ounce to now sit at $1665. The yellow metal hit a two-week high today as it benefited from a decline in treasury yields and the dollar. Also lending the metal a hand was stronger crude oil prices.

There are some key chart developments that could be pointing to something of significance: a top in the Dollar Index. At the same time, U.S. equity markets are showing some signs of a bottom having been reached. This could potentially mean that inflation has or is in the process of peaking. If that is the case, the Fed may not need to keep its foot on the gas with its aggressive rate hikes. The central bank could cross the finish line a lot faster than expected on its hiking campaign, and if so, markets may return to a degree of normalcy.

A dollar top and stock bottom could also suggest that the markets and global economy may be able to avoid a major recession that has been feared for several weeks now. Precious metals traders appear to be taking notice of these recent chart developments, possibly buying as they believe that the dollar and yields have already peaked and metals demand may improve if no recession is seen.

While it may be too early to tell if that is in fact the case, the yellow metal still has some significant hurdles to higher prices. The Fed will almost certainty hike rates again this month and next month, ending the year as it said it would. Not wanting to lose any credibility it has left, the central bank is unlikely to reverse course suddenly even if inflation has topped out. A pause or reversal by the Fed may be far more likely early next year. That does not mean gold cannot rise in the meantime,  but it is something to keep in mind.

The yellow metal remains stuck in no man’s land. The $1700 level is a key for the bulls in the short-term, while the bears will target a close below the $1600 level. Whichever side breaks first may be the side to which prices continue. The bulls have done a good job of absorbing much of the selling pressure seen in recent weeks. The bargain hunting buying seen during the last few months could eventually lead to an explosive upside move. The bulls appear patient and willing to wait. The bears, on the other hand, may be forced into a significant short-covering rally soon if the downside does not continue.

The dollar and the Fed likely hold the keys to gold’s fortunes. The Dollar Index is at the highest levels seen in years, while yields have also exploded higher to multi-year highs. If this trend stops or reverses course, the gold bears may get annihilated. The Fed could be the one to fuel such a reversal if it looks to take a pause or even loosen rates again.