A weight has been lifted from the gold market after the Federal Reserve signaled Wednesday that it is in no hurry to raise rates faster than it was already expecting this year, according to one gold analyst.

In a telephone interview, George Milling-Stanley, head of gold investments at State Street Global Advisors said that he now expects gold prices to eventually retest the top of its recent range with a growing potential that market ultimately breaks through resistance.

April gold futures last traded at $1,326.30 an ounce, up 0.36% on the day.

"Three rate hikes was not a problem last year as prices rose 13% and I don't think that three rate hike this year is going to be a problem," he said. "Gold could do even better than last year."

Wednesday, the Federal Reserve raised interest rates by 25 basis points, pushing the federal funds rate to a range between 1.50% and 1.75%. At the same time, the central bank was slightly more optimistic as it expects the economy to grow 2.7% this year and the unemployment rate to fall to 3.8%; however, the key for gold investors was that it does not see inflation heating up and signaled only two more rate hikes this year. Milling-Stanley said that the lack of any significant forward guidance made this statement "blander than usual."

"The latest Fed action is a continuation of its established moderate pace of normalization," he said. "So with this interest rate business out of the way we have a few months were gold can find its natural buoyancy. I would expect gold to take another crack at long-term resistance at $1,400."

As to what could drive gold above critical long-term resistance, Milling-Stanley said that he sees a couple of factors, the biggest one being inflation.

"Inflation is back in the conversation again," he said. "There is a growing concern that the recent tax cuts won't lead to economic growth but lead to higher inflation," he said.

Fed Chairman Jerome Powell also revealed some doubt as to the impact of the tax cuts. While the Federal Reserve is the U.S. economy growing by 2.7% this year, its well below government expectations that the tax cuts will boost the economy by at least 3%.

Powel said that it would take a significant increase in productivity to create 3% growth this year.

Milling-Stanley added that it is also more than just the tax cuts. Proposed infrastructure funding will also be inflationary if there is not a clear plan in place that outlines how the government will offset the increased spending, he explained.

If the Federal Reserve does signal more aggressive tightening late in the year it will be because of a growing inflation threat, which will continue to leave real rates at low levels and will prove to be positive for gold, said Milling-Stanley.

Milling-Stanley said that he is also optimistic that global economic growth boosts emerging market demand for the yellow metal.

"Demographics and economics in emerging markets are moving in gold's favor," he said. "That will continue to support global prices."

By: Neils Christensen of www.kitco.com.