Gold's price this week so far, showing a steady trading bandwidth before yesterday's slump.

Gold slipped yesterday from a peak of $1,795 to a low of $1,746 per ounce, before rallying slightly overnight and this morning back to $1,764.35. Strong bond yields and a stronger dollar have hurt the gold price, but optimism remains long term.

The US dollar, which has experienced similar levels of volatility to gold in recent weeks, received a boost ahead of next week's Federal Reserve meeting; a meeting in which many investors now seem to think the Fed will finally renege on its quantitative easing stimulus program and begin to taper it off.

Things get complicated for investors when breaking down the fiscal logic however. When a central bank reduces its stimulus programmes, this typically boosts the currency – as you're no longer diluting it by printing more of it - and it boosts the yield of Treasury bonds. Gold, as a non-yielding asset, suffers in this event: known as an 'opportunity cost'.

The problem is that stimulus has been fuelling the stock market bubble – particularly in the tech sector (hey Nasdaq). As such, the expectation is that the markets will suffer when the cheap money goes away. Historically, gold does well when the markets don't, but in recent years gold has done well when they have too, because cautious investors and funds don't want to get caught out like in 08/09 and are diversifying ahead of time (as they should) to protect their wealth against turbulence or worse.

For all that gold has suffered a short, sharp loss this week, if tapering comes in late this year or early 2022, gold could likely benefit and climb back above $1,800 and when you factor in the ongoing inflation and the challenge ahead of curbing it... perhaps gold will even push to $1,900 per ounce again.