The rejection of a three-month high in gold points to declines.

Gold prices are intimately tied to the US dollar and the outlook for the Federal Reserve at the moment. The dogged commitment to a rate hike this year from Fed Chair Janet Yellen will underpin the US dollar and keep the pressure on gold.

The best chance for gold to breakout was at the start of this week. The past two months of US economic data have been a series of disappointments and talk began to circulate about Yellen pushing back the timetable for hikes.

Yet on the slightest glimmer of hope -- a strong US housing starts report on Monday -- the US dollar turned around and gold began a drop from $1232 to $1205.

When Yellen finally made the speech on Friday, it was a great disappointment to anyone expecting her to take a more sombre tone on the economy.

Instead, she doubled-down on the belief among the majority of Fed members that a cold winter, seasonality and other 'statistical noise' was the cause of an economic contraction in Q1. She also reiterated that a rate rise at some point this year remains the base case.

At some point in the near future, US economic data will begin to look slightly better. The Fed will take that as a signal that they have been right all along; that growth and inflation are in the pipeline.

That talk will start like a snowball and turn into an avalanche and gold is an obvious victim as fears about inflation and currency debasement subside.

The week ahead features US data on durable goods orders, house prices, the Markit services PMI, new home sales, pending home sales, consumer confidence, the Richmond Fed, the Chicago PMI and the second reading on Q1 GDP. It will only take two or three good readings to keep the dollar moving higher and gold on the back foot.