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On Wednesday, gold prices dropped to almost a two-week trough as the U.S. dollar and Treasury yields firmed. The firmer greenback made the bullion more expensive for investors using rival currencies. The higher yields lower dampened the appeal of the non-interest-bearing metal. Despite this, prices were range-bound as safe-haven demand countered the impact of the robust dollar and yields. But since gold fell around 1% in the previous session, it recorded its second straight monthly decline in May.

Spot gold is currently trading at $1,835.91 per ounce as of 0830 GMT.

Michael McCarthy, the chief strategy officer at Tigers Brokers, noted that the dollar, interest rates, and geopolitical concerns continue to control gold prices.

Talking about interest rates, President Joe Biden met with Federal Reserve Chair Jerome Powell on Tuesday. Biden stressed that it is his top priority to address inflation. He also assured the central bank freedom from political interference to fight inflation.

Powell said the central bank would ratchet interest rates as high as needed, even if it proves painful to households and firms, and pushes the unemployment rate higher. The Fed has already implemented a 3/4 percentage point rate this year. But most policymakers want more.

Fed Governor Christopher Waller said he would advocate for 50-basis point hikes at every meeting until there are substantial reductions in inflation. Another hawk, St. Louis Fed President James Bullard wants a 3.5% increase by the end of the year. It means a half-percentage-point increase at the central bank’s remaining meetings in 2022.

On the technical front, Reuters technical analyst Wang Tao predicted that spot gold might extend its losses since it has fallen below the support level at $1,837.

FXStreet senior analyst Dhwani Mehta agreed and suggested that gold prices could retest the $1,800 mark. On Tuesday, prices fell below the rising trendline at $1,860 and then later below the 21-DMA at $1,847. On Wednesday, gold prices closed below the 200-DMA at $,1840, signaling further declines. In addition, the 14-day Relative Strength Index dropped below the midline, suggesting more room for the downside. Mehta also mentioned that inflated-led growth fears undermine the risk sentiment amid geopolitical woes.

In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, fell 0.1% to 1,068.36 tons on Tuesday. The decline reflects current market sentiments.