China International Capital Corp (CICC) said the U.S. Federal Reserve may ultimately determine the end of the current bull market in gold, though the turning point has not yet arrived.

In a research note, CICC said the Fed is unlikely to shrink its balance sheet in the near term, while the bar for renewed balance-sheet expansion or quantitative easing has risen significantly.

If the Fed is reluctant to support fiscal easing through balance-sheet expansion, CICC said policymakers could adopt a temporary form of monetary-fiscal coordination. This could involve deeper interest rate cuts by the Fed alongside increased issuance of short-term debt by the U.S. Treasury, initially promoting financial deregulation before eventually resuming balance-sheet reduction.

CICC said the scale of the Fed’s eventual rate cuts may exceed market expectations, potentially leading to a near-term return of dollar-loosening trades.

A steepening U.S. Treasury yield curve combined with financial deregulation would be positive for U.S. bank stocks, the firm added.

While the Fed may ultimately signal the end of the gold bull market, CICC said that inflection point has not yet been reached. Chinese equities and global commodities are facing only temporary pressure and are likely to stabilize as expectations for policy easing return.