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There seems to be an increasing amount of talk regarding gold and its ability to return to all-time highs. The yellow metal has had a strong run over the last several weeks and is up over $300 per ounce since November. The reasoning behind gold’s strong performance seems clear enough and many investors feel it is likely to make another critical jump in the weeks ahead. The metal has already taken the $1900 level on a closing basis and thus far has been able to hold this level on the chart. Markets do not typically go straight up or straight down, however, and the gold market is no different. The metal may need to see a significant pullback before the bulls can take prices sustainably higher. When such a pullback could occur is anyone’s guess. Given the recent upside in the market, however, now or very soon seems to make a great deal of sense.

Many investors have missed the gold rally in recent weeks. The metal spent months in a tight trading range before finally breaking out at the $1700 level. What is to say that the metal could not spend another several month’s trading sideways, only in a higher range? The answer to that question is nothing. The markets are awaiting the Federal Reserve’s decision on rates next week before making any big moves. The decision on rates isn’t even the most important thing. What is important is what the Fed says about its plans going forward. The central bank does not want to overtighten and be forced to begin easing again too soon. The Fed is likely, therefore, to take its time rising rates to the desired level in the first half of the year. This fits into the Fed’s plans to leave rates higher for longer.

Although the Fed is unlikely to provide any clues about its easing plans, it is likely to signal a move towards easing possibly in the second half of the year. Inflation data has been coming down, and although it is still very elevated, it is moving in the right direction. This would seem to suggest that the Fed’s actions are working. Now forced to walk a tightrope, however, the Fed will look to be especially careful as it implements its desired policy. That caution could be reflected in the central bank’s commentary over the next few months as it may look to provide little if any, useful information for investors.

The market may remain range bound until more clarity is seen from the Fed. The bulls need to produce a close above resistance at the $1950 level. The bears are looking to produce a close first below the $1900 level and then at the $1800 level. The metal could pull back to the $1800 level before finding more solid ground on which to rally. Patient, long-term investors understand this and may be willing to step in and buy the market on any significant dips. “Good things come to those who wait,” is an important saying for gold investors and could prove to be very true for the bulls.