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The gold market has seen some significant ups and downs this past year. From riding high on easy monetary policy one minute to being drained on large rate hikes the next, the yellow metal has been all over the place. That trend has dissipated in recent months, however, as the market has maintained a trading range from $1800 to $1900. The bulls and the bears appear ready and waiting to jump on the next significant catalyst which could arrive at any time now. Such a catalyst could take time to develop, however, and the longer it takes the more time the metal may stay range-bound.

A big positive for the gold bulls may be last week’s 75-basis point rate hike. The hike was the largest by the Fed in about 30 years and may demonstrate that the central bank is quite serious about fulfilling its mandate to control price pressures. As a positive for the gold bulls, the market held up quite well in the aftermath of the rate hike and is still trading in its recent range. The metal likely held its ground as the Fed may have thrown up a massive red flag when it raised rates by 75-basis points, the largest increase in almost 30 years. The Fed is determined to fight inflation, and in doing so, may become increasingly likely to push the economy into a recession.

Although the Fed has signaled that rates could hit 3.50% by the end of the year, investor fear could keep gold in the mix even as yields continue to rise. Fears over the Fed sending the economy into recession may have changed the relationship between gold and interest rates. Gold may still rise, and rise substantially, even as the Fed looks to hike rates to combat inflation.

Fears over a Fed misstep may be overdone at this point, and the central bank could still possibly achieve a soft landing despite a narrowing window. The labor market remains healthy, and if Americans are able to hold onto their jobs, a recession can still be avoided.

Despite the Fed’s recent action, it remains well behind the inflation curve. Some analysts have argued that the Fed would need to hike rates to the 20% level (As was done in the Volcker days) to get inflation to a tolerable level. This seems extremely unlikely at this point in time, however, and investors may just have to remain nimble and nervous when it comes to what the Fed may be able to accomplish.

The market remains stuck in neutral as it sits near the $1850 level. The $1800 and $1900 levels remain key areas of support and resistance. Whichever level is breached first, on a closing basis, could determine gold’s trend for the next several months. The market could, however, spend even more time in its recent range as investors await more moves from the Fed and the effects of those moves to work their way through the economy.