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The Federal Reserve has been busy raising interest rates for some time now. After hiking interest rates at the fastest pace since the 1980s, the Fed may now see fit to take a breather. Recent data shows inflation easing for a 10th month, and that lighter inflationary data may give the Fed the green light to take a pause from rate hikes.

The Consumer Price Index, or CPI, rose 4.9% in April. The 4.9% rise from the year earlier was the smallest increase since April 2021. On a monthly basis, prices rose by .4% compared to a rise of .1% in March. The monthly rise was driven primarily by the cost of fuel, used vehicles and housing. Despite the annual rate of inflation falling by nearly half since June, the rate is still far above the Fed’s desired target of 2% annualized. The rate hikes that have taken place over the last several months are still working their way through the economy, however, and may continue to clamp down on price pressures in the months ahead.

The easing of inflationary data is likely to give the Fed reason to pause. Concerns over a recession have been on the rise again in recent months, and as long as the Fed is raising rates the likelihood of a recession may increase. The Fed standing ;pat on rates, however, may give the economy some breathing room and could prevent a recession from occurring.

Stocks remain not far from all-time highs and the markets could potentially stage a comeback if the Fed signals no more rate hikes are forthcoming at this time. Such a signal could arrive at the next FOMC meeting or even through Fed official commentary beforehand. Investors will be paying close attention to any details or plans from the Fed, as the central bank could be the main driver of market action in the summer months.

The gold market is still highly bullish, with the bulls maintaining control of the metal. The bulls need to target and take out the $2100 level on the upside. The bears, on the other hand, need to target and produce a close below the April lows around $1965. Price action between these two levels may be indicative of back-and-fill trade before the market attempts to make another run higher. The gold market may already find itself within the summer doldrums, however, as the Fed looks to pause and as the headline cycle quiets down.

The possibility of further deterioration between the U.S. and China may keep gold investors in the market. China has been stockpiling a significant amount of gold bullion for some time now, and some believe that China is gearing up for a move away from the dollar. If China were to move away from the dollar, it could pave the way for other nations to do the same. Dollar weakness due to rising supply and declining faith in it could put gold into major rally mode, possibly sending the metal to fresh all-time highs.