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This week, gold had its worst performance since June 18, despite rising prices early on Friday.
After a break in trading caused by Thanksgiving Day, investors seek gold as a safe haven amid rising COVID-19 risks.
On Friday, US gold futures edged up by 0.5% to $1,793,90 - the biggest gain for the asset this week.
Gold lost 2.8% in value since Monday on the news of Jerome Powell's reappointment as chairman of the Federal Reserve, suffering the biggest loss in 5 months.
Market players have interpreted Powell's reappointment as a signal of possible acceleration of QE tapering. The Fed could hike interest rates earlier than anticipated to tackle soaring inflation.
The latest Fed meeting minutes, published on Wednesday, indicate hawkish sentiments are on the rise among Fed officials. Many members of the board are in favor of tightening monetary policy if inflation continues to rise.
The Federal Reserve is likely to double the pace of tapering monthly bond purchases in January to $30 billion, and wind down the program fully by mid-March, Goldman Sachs analysts said in a note published on Thursday.
Monetary tightening pushes up yields of US treasury bonds, which reduces gold's appeal for investors.
Nevertheless, investors are currently more concerned about the rapid spread of COVID-19.
Amid the ongoing fourth wave of the pandemic in Europe, the World Health Organization and the UK's National Health Service are calling for emergency meetings on COVID-19 situation.
The coronavirus threatens the recovery of the global economy, boosting the appeal of safe-haven assets such as gold.
Gold is also popular as a hedge against inflation. Some analysts believe steady inflation would push up demand for the asset, boosting its price in 2022.
"Our forecast of above-target inflation and still-low U.S. interest rates into next year implies well-supported bullion values in 2022," Scotiabank commodity analysts said.
The Canadian bank forecasts the average gold price would rise by 3% to about $1,850 in 2022. Furthermore, the analysts favor gold over silver.
"Also perceived as a safe haven and an inflation hedge, the metal's value is influenced by many of the same factors as that of bullion. However, given silver's range of industrial applications and our expectations of some China-driven near-term slowdown in construction and manufacturing activity, we are less optimistic about its near-term prospects than we are for bullion," Scotiabank analysts said.
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