What is the right thing to do in this situation?

In this situation, you correctly chose to wait before the junction. Even though there is a yellow diamond traffic sign that normally indicates you have the right of way, a police officer is present and giving signals in the intersection. The instructions of the police officer always override any traffic signals or signs. Since the officer is facing you with a raised hand, you must stop and wait, just as you did. Remember: Always follow the signals of a traffic officer first before obeying traffic signs or signals.