By Barani Krishnan

Investing.com – For the record, it ended flat on the week. Yet, gold wouldn’t fool anyone on what prompt sentiment is for the yellow metal.

U.S. gold futures’ most active contract, , settled down $1.90, or 0.1%, at $1,751.70 per ounce on New York’s Comex.

The week ended flat with the settlement actually being 30 cents better than Friday.

However, those who track the market and long-term investors have seen their portfolios eroded by optimistic predictions over the past nine month. The real comparison for the week should have been with last Wednesday.

That was the day when gold lost 2%, its most since early August, as spiked and the dollar girded higher as well on speculation of hawkish Federal Reserve action over its economic stimulus and lower-for-longer interest rates.

“Gold has been battling against a stronger dollar that stemmed from surging Treasury yields post-Fed,” said Ed Moya, analyst at online trading platform OANDA.

“Gold is in a very tough spot and volatility will remain elevated with the risks remaining to the downside. The U.S. growth story will continue to improve if COVID modelers are right about a steady decline in COVID cases through March.”

Moya added that gold longs could be in further trouble if Chinese property giant Evergrande, which rocked markets this week with its growing debt crisis, managed to avert a contagion. “If the Evergrande fallout is contained over the weekend, gold could be vulnerable for a test of the $1,700 level.”

Fed Chair Jay Powell, at the conclusion of the central bank’s monthly policy meeting on Wednesday, repeated his mantra that inflation was trending above the Fed’s target of 2% per annum due to the higher costs of doing business in a pandemic-constrained economy.

Since the beginning of 2020, the market has repeatedly shown it doesn’t trust the Fed can control inflation. Bond yields have risen to multi-year highs in response. The main victim of the yield rises has been gold, a precious asset called a “safe haven” and non-yielding.