Gold down 0.7% to $1,709 as the dollar comes back into favour

As much as gold has shown some poise in recovering earlier this week, the recovery momentum is fizzling towards the weekend as we are also seeing price action fall back below its key hourly moving averages today.

The dollar resurgence on higher yields today is the main driver and that puts sellers back in near-term control, although they need to break back below the 50.0 retracement level of the swing move higher this week @ $1,708 to establish a firmer grip.

That aside, the biggest issue with gold at the moment isn't so much that of rising yields but more so that it is failing to recapture the hearts of investors.

The two may go hand-in-hand but the precious metal has been rather out of favour since the turn of the year, even before all this inflation/reflation narrative kicked into gear.

As of yesterday, ETFs cut gold holdings for a 19th straight session – marking the longest losing streak since 23 December 2016. And until investor appetite turns around, it is tough to really argue for the gold momentum to shift the other way on a sustainable basis.

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