The significant movement of the dollar prevented market participants from significantly increasing the price of the precious yellow metal. The dollar added 0.80%, or 81 points, bringing the dollar index to 102.20.

The significance of dollar strength can best be seen by looking at spot gold prices in terms of the gold index, which separates the impact of dollar strength or weakness from market participants actively buying or selling gold.

Both the strength of the dollar and the rise in gold prices yesterday and today were by-products of market sentiment focusing on slowing inflation rather than raising rates. It is this market sentiment that has led to an increase in the price of the US dollar, as well as support for gold prices. As a rule, gold and the dollar move in the opposite direction, and not in tandem, as they did yesterday and today.

Gold prices edged up from a two-week low on Wednesday as rising fuel prices saw investors look to the safe-haven metal amid fears of rising inflation, although a stronger dollar and higher US yields held the gains.

Yesterday, European Union leaders agreed to a partial and phased ban on Russian oil as the main force that will keep inflation at its current level.

According to OANDA Senior Analyst Edward Moya, investors are in dire need of more safe havens than just treasuries, which is why they choose gold. And inflation really can't come down when energy costs are high.