Gold fell on Wednesday, holding below the key technical $1,750 level, as Treasury yields and the dollar gained in the run-up to Friday’s U.S. labor market report that could influence the Federal Reserve’s tapering schedule.

Fundamentals

Spot gold fell 0.7% to $1,747.61 per ounce by 0923 GMT, while U.S. gold futures shed 0.8% to $1,747.50.

Investors flocked to the dollar, which competes with gold as a safe-haven, to hedge against concerns that soaring energy prices could exacerbate inflation and slow growth.

A higher dollar also dents bullion’s appeal for buyers holding other currencies. Yields on 10-year U.S. Treasuries also advanced.

Xiao Fu, head of commodities markets strategy at Bank of China International said that even if the non-farm payrolls data is not “spectacular and just in line with expectations”, some Fed members already think the condition for tapering has been fulfilled, and that is putting pressure on gold.

The NFP report will be the last major data before the next FOMC meeting on Nov. 2-3. Expectations are for 488,000 jobs to have been added in September, enough to keep the Fed on course to begin tapering before year-end.

But some investors could buy gold if prices decline substantially as inflationary pressure still remain, Fu added.

Interest rate hikes — with central banks, including from New Zealand, having already raised rates — push government bond yields up, translating into a higher opportunity cost for holding non-interest yielding bullion.

“Gold is unable to take advantage of the current risk-off trading stance,” ActivTrades technical analyst Pierre Veyret said in a note.

“The (gold) market will have to clear the zone at $1,765-$1,770 to unlock the door to further gains up to first $1,777 and then $1,790,” he added.

Spot silver fell 1.7% to $22.28 per ounce, platinum slipped 1.6% to $946.07, and palladium shed 1.1% to $1,892.82.