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© Reuters.

By Barani Krishnan

Investing.com – A ramping dollar and U.S. Treasury yields gave little respite on Friday to gold prices trying to rebound from the previous day’s meltdown, with the yellow metal settling down for a third day in a row and booking its worst weekly loss in six.

U.S. gold futures’ most active contract, , settled down $5.30, or 0.3%, at $1,751.40 per ounce on New York’s Comex.

The week’s decline was 2.3%. It was the lowest since July 29. December gold slumped $50 at one point in Thursday’s session, to a five-week bottom of $1,745.50. The meltdown in gold came as rival dollar catapulted on data showing upbeat U.S. retail sales for August that put the economy in ebullient light after weeks of challenging data from Covid’s Delta variant.

Over the past two sessions, the, which compares the greenback to the euro and five major currencies, increased 0.7%, reaching a high of nearly 93.200 in three weeks. The yield on the rose for a third day in a row, also weighing on gold.

“Gold’s worst enemy is surging Treasury yields and right now that trade is gaining momentum,” said Ed Moya, head of research for the Americas at online trading platform OANDA. “Gold is still vulnerable to technical selling and will not likely attract buyers until $1,700.”

Gold is also in an inflection point ahead of next week’s Federal Reserve meeting that could revisit the subject of taper for the central bank’s stimulus program that has juiced stock prices over the past 18 months. Chairman Jay Powell and his senior most Fed colleagues have so far issued mixed messages on the taper, with the broad market consensus that any trimming of the central bank’s monthly bonds-asset buying may not occur until November.

A lack of an immediate announcement about the taper may put a limit on the dollar’s yields and Treasury yields, and give lifeline to gold.

Sunil Kumar Dixit (chief technical strategist, SK Charting) in Kolkata, India, stated that even if gold can sustain a rebound, it may not reach $1,800. “The main trend changes only upon a decisive trade above the $1,835 zone, and that has witnessed multiple failures,” Dixit said.

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