Gold Creeps Back Near $1,800 after Biggest Weekly Drop Since Nov. By

By Barani Krishnan – Gold settled at just under the crucial $1,800 an ounce level after a modest bounce on Friday, despite losing almost 2% on the week for its biggest weekly decline since November.

U.S. Treasury yields hit two-year highs and the dollar dipped but stood not far from recent peaks. Yet, gold showed resilience in its latest session, indicating that it could be running on the steam of U.S. inflation, which was chugging at its fastest pace in 40 years.

Gold futures’ most active contract on New York’s Comex, , settled up $8.20, or 0.5%, $1,797.40. For the week, it fell 1.7% after Thursday’s slump of almost 2%.

“Gold had a bad week, but it could have been much worse when you consider the went from 1.53% to 1.75%,” Ed Moya, analyst at online trading platform OANDA said, in a post made just before the benchmark yield rate went to January 2020 highs of 1.79%.

While gold labored below the $1,800 level and the 50- and 200-day simple moving averages, “a continued selloff seems less likely”, Moya, said. But he conceded that “if bearishness resumes next week, buyers could emerge at the $1770 area.”

Gold’s Achilles heel has been the $1,830 resistance, which it has tried in vain to crack numerous times since November.

It made another attempt at this on Wednesday, just before the release of the Federal Reserve meeting minutes for December that indicated the first pandemic-era U.S. rate hike might come as early as March — spelling a boon for the Treasury yields and the dollar and gloom for safe-havens such as gold.

The Fed is expediting its rate tightening to rein in the fastest inflation growth in more than a generation.

News of rate hikes are almost always bad for gold, which somewhat reflected this last year as it closed 2021 down 3.6% for its first annual dip in three years and the sharpest slump since 2015.

But some analysts think that if the U.S. inflation theme remains strong through 2022, then gold could rebound, and even retrace 2020’s record highs above $2,100 — which, incidentally, came on the back of concerns about soaring price pressures.

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