The gold market is now forced to fight not only with rising bond yields, but also the increasing demand for the US dollar.

In fact, according to some analysts, gold will struggle amid growing expectations for economic recovery, as such will push the USD index to 91 points, its highest level in four weeks.

Therefore, even if investors try their best to bring gold prices up, it remains behind session lows, which is just above $ 1,700 an ounce. To put it more precisely, April futures last traded at $ 1,736.17 an ounce.

Many economists believe that dollar will continue to rally, especially since the US House of Representatives has already passed US President Joe Biden's $ 1.9 trillion bailout bill. They expect this new stimulus will give additional impetus to economic growth.

And although this bill also has a positive impact on gold because in the long term, it could drive inflation up, analysts say investors should still prepare for any change in market expectations.

"Earlier investments in gold have turned out to be not very reliable. Nevertheless, since its volatility is not particularly high, it could still be kept in the portfolio. Economic recovery in India and China may restore consumer demand for gold, but a strong dollar will certainly affect prices," Heraeus Precious Metals said.

In short, if the US tightens its monetary policy, demand for the dollar will increase, which will accordingly lead to a sharp decline in gold.

To add to that, TD Securities said the dollar continues to garner support amid growing economic turmoil in Europe.

"Outlook for the euro remains weak because the EU economy is still in a downturn. We believe the currency will lag behind its competitors, especially since the ECB is even more active against the risks of tightening financial conditions. If the current data trajectory continues, there may be new tailwinds for the dollar in the coming days. "