Gold prices fell again last week, marking the second week in a row of losses. By Friday afternoon, the August futures contract had dropped by over $56, settling at $3,285.10. For the entire week, gold lost nearly 3%, or about $99. This happened despite several factors that usually support gold prices.

One major factor was inflation. The latest data from the U.S. government showed that inflation, as measured by the Personal Consumption Expenditures (PCE) index, rose from 2.1% to 2.3% annually. Even more importantly, the core PCE—which excludes food and energy—rose to 2.7%, higher than expected. Normally, higher inflation supports gold prices because gold is seen as a way to protect value.

However, markets didn’t react strongly to this inflation data. Investors still believe the Federal Reserve might cut interest rates soon, possibly in July or more likely in September. Some even expect rate cuts at both meetings. Lower interest rates usually boost gold prices, so the lack of price movement in gold was surprising.

Another supportive factor was the drop in the U.S. dollar. The dollar index fell by 1.32% over the week, making dollar-priced assets like gold cheaper for foreign buyers. Yet gold prices still fell. This suggests that the traditional connections between gold, inflation, and the dollar may not be working the same way right now.

Why is this happening? Investors seem to be more willing to take risks. Stock markets are booming: both the Nasdaq and S&P 500 hit new all-time highs. News of progress in U.S.-China trade relations added to the positive mood. A new agreement on rare earth shipments helped reduce tensions and lifted Asian markets to their highest levels in over three years.

This optimism is pushing investors to move money out of safe-haven assets like gold and into riskier, growth-oriented assets, such as technology stocks. That’s a big reason why gold hasn’t responded to the usual positive triggers.

From a technical perspective, gold appears to be in a holding pattern. The price movements suggest that gold is consolidating and lacks clear direction. Even with positive news like a weaker dollar and rising inflation, gold prices haven’t gone up. This shows that the market is unsure about gold’s role in portfolios, especially as global risks seem to be fading.

In short, gold is caught in a tug-of-war. On one hand, inflation and expectations for lower interest rates should support it. On the other hand, growing optimism about the economy and trade is pulling money toward stocks and away from gold. Until one of these forces becomes dominant, gold may continue to move sideways.