After Monday's plunge, the gold market finally did not fall further, and spot gold prices are now back around $1860 an ounce.
Carsten Fritsch, an analyst at Commerzbank (Commerzbank), said bond yields remained a cautionary factor for the gold market in the short term.
"the higher the bond yield, the less attractive gold is."
Jim Wyckoff, a senior analyst at Kitco, said the rise in bond yields was an important shift in the market as a whole.
"US bond yields are far from enough to worry about, but if more attention is paid, market sentiment will change."
The dollar was boosted by a "blue wave" that boosted gold's performance as a "blue wave" rose expectations of a rate hike after last week's Georgia election results, according to TD Securities (TD Securities).
Rhona O'Connell, head of market analysis at StoneX, said gold's performance over the past few trading days was largely a technical sell-off.
"the speed at which gold prices are falling indicates that stops are triggered and kinetic energy trading occurs."
A number of Fed officials spoke this week, raising expectations that the Fed would tighten sooner than expected.
TD Securities said the Fed's recent comments suggest that it may test the resilience of the U. S. stock market.
"if the Fed adapts to a steeper bond yield curve, the perception that inflation can rise without interest rates will be challenged and gold will become more of a safe haven."
However, the bank said it needed to distinguish between short-term gold prices affected by higher bond yields and long-term precious metals.
"it looks like there will be new bailouts and infrastructure projects soon, which will push up inflation expectations and the price of assets such as gold as a hedge against inflation."
StoneX's O'Connell also said that the whole macro face of gold is still positive. There will be more stimulus after Biden takes office, and more liquidity will be injected into the market, which will be good for gold, at least in the coming months.
Fritsch of Commerzbank points out that real interest rates in the United States are negative after taking into account inflation, which will continue to be good for gold.
"the United States has a lot of debt, and there will be more stimulus to be injected. And the decline in gold prices, gold ETF and not too much outflow, may be more speculative selling.